Financial statements for Narstad Corporation appear below: Narstad Corporation's debt-to-equity ratio at the end of Year 2 was closest to:
A)0.50
B)0.36
C)0.19
D)0.17

Question

Financial statements for Narstad Corporation appear below:   Narstad Corporation's debt-to-equity ratio at the end of Year 2 was closest to:
A)0.50 
B)0.36 
C)0.19 
D)0.17

Quizplus · Accepted Answer

Debt-to-equity ratio = Total liabilities / Total equity
At the end of Year 2, the total liabilities were $180,000 and the total equity was $500,000, so:
Debt-to-equity ratio = $180,000 / $500,000 = 0.36
Therefore, the closest answer is B, 0.36.

Financial Statements for Narstad Corporation Appear Below: Narstad