If a firm has a debt ratio of 54%, what is the firm's debt to equity ratio?

If a firm has a debt ratio of 54%, then the firm's debt to equity ratio is 117%

Explanation:

The Debt Ratio is obtained dividing Liabilities / Assets. Then, a result of 54% means that 54% of the asset is composed by liabilities.

Liabilities 54

Assets 100

Debt Ratio = 54%

By the general accounting formula we know that

Assets = Liabilities+Equity. Then,

Assets (100) = Liabilities (54) + Equity (46)

If the Debt to equity ratio is calculated by the division of liabilities/Equity - Then:

Liabilities 54

Equity 46

Debt to Equity Ratio = 117%

This means that for 1 dollar on the Equity the company has 1 dollar plus 17% or 17 cents on the Liabilities.