Bello, Inc., has a total debt ratio of. 31.

a. What is its debt-equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

b. What is its equity multiplier? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

Question

Business

Carmelo Frey

31 January, 18:52

Bello, Inc., has a total debt ratio of. 31.

a. What is its debt-equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

b. What is its equity multiplier? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

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Answers (1)

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Alexandria Cummings · Answer 1

a. Debt Equity ratio is calculated by dividing long term Debt by total equity of the company.

b. Equity Multiplier or P/E ratio=Market value per share/Earning per share.

Explanation:

a. Debt Equity ratio is calculated by dividing long term Debt by total equity of the company. The Debt Equity ratio can be calculated using the Market value of debt or equity. It can also be calculated using the book values of debt or equity which are included in the balance sheet of the company.

b. Equity multiplier is also known as price / earning ratio. A price/earnings ratio or P/E ratio is the ratio of the market value of a share to the annual earnings per share. For every company whose shares are traded on a stock market, there is a P/E ratio. For private companies (companies whose shares are not traded on a stock market) a suitable P/E ratio can be selected and used to derive a valuation for the shares.

Equity Multiplier or P/E ratio=Market value per share/Earning per share.