A corporation reports the following year-end balance sheet data.

-The company's debt-to-equity ratio equals:
A)0.58
B)1.27
C)2.07
D)0.37
E)0.63

Question

A corporation reports the following year-end balance sheet data.

-The company's debt-to-equity ratio equals: 
A)0.58 
B)1.27 
C)2.07 
D)0.37 
E)0.63

Quizplus · Accepted Answer

The debt-to-equity ratio is calculated by dividing a company's total liabilities by its shareholder equity. The correct answer, 0.58, suggests that for every dollar of equity, the company has 58 cents of debt. This ratio is a measure of the degree to which a company is financing its operations through debt versus wholly-owned funds.

A Corporation Reports the Following Year-End Balance Sheet Data