Debt Management Ratios Tierre's Ts,Inc.reported a debt to equity ratio of 3 times at the end of 2013.If the firm's total assets at year-end are $15 million,how much of their assets is financed with equity?
A)$3.75m
B)$5m
C)$11.25m
D)$45m

Question

Quizplus · Accepted Answer

The debt to equity ratio of 3 means that for every $1 of equity, there is $3 of debt. Therefore, the equity portion is 1/4 of the total financing. If total assets are $15 million, then equity is $15 million / 4 = $3.75 million.