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14 October, 18:58

A firm has total assets of $638,727, current assets of $203,015, current liabilities of $122,008, and total debt of $348,092. What is the debt-equity? A ...87 B. 1.43 C. 1.31 D. 1.03 E. 1.20

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  1. 14 October, 19:10
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    E. 1.20

    Explanation:

    The formula and the computation of the debt-equity ratio is shown below:

    Debt equity ratio = (Total debt : Shareholders' Equity)

    where,

    Total debt = $348,092

    And, the shareholder equity would be

    = Total assets - total debt

    = $638,727 - $348,092

    = $290,635

    So, the debt - equity ratio would be

    = $348,092 : $290,635

    = 1.20
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