Question

Trina'sTrikes, Inc. reported a debt-to-equity ratio of 2 times at the end of 2018. If the firm's total debt at year-end was $10 million, how much equity does Trina's Trikes have?

Answer 1

Answer: $5 million equity.

Step-by-step explanation:

Given that,

Debt-to-equity ratio = 2

Total debt at year-end = $10 million

Therefore,

Debt to equity =
`(Total Debt)/(Equity)`

Equity =
`(Total Debt)/(Debt\ to\ Equity\ Ratio)`

Equity =
`(10\ million)/(2)`

Equity = $5 million

So, Trina's Trikes have $5 million equity.