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11 January, 17:21

The gift shoppe has total assets of $487,920 and an equity multiplier of 1.47. what is the debt-equity ratio?.68

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  1. 11 January, 20:12
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    Equity multiplier = Total assets/Total equity

    Total assets = 487,920

    Equity multiplier = 1.47

    1.47 = 487,920/Total equity

    Total equity = 487,920/1.47 = 331,918.37

    Total debt = Total assets - Total equity = 487,920 - 331,918.37 = 156,001.63

    Debt-equity ratio = total debt/total equity

    Debt-equity ratio = 156001.63/331918.37 = 0.47

    Alternatively,

    Equity multiplier = 1 + Debt-equity

    1.47 = 1+debt-equity

    Debt-equity = 1.47-1 = 0.47
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