Karma Company has total assets of $190,000 and total liabilities of $90,000.The company's debt-to-equity ratio is closest to which of the following?
A) 0.32 to 1.
B) 0.47 to 1.
C) 0.53 to 1.
D) 0.90 to 1.

Question

Quizplus · Accepted Answer

The debt-to-equity ratio is calculated as total liabilities divided by total equity. Total equity is total assets minus total liabilities, which is $190,000 - $90,000 = $100,000. The debt-to-equity ratio is $90,000 / $100,000 = 0.90 to 1.

Karma Company Has Total Assets of $190,000 and Total Liabilities