Question

At year-end, Mallard Company reported the following on its financial statements: Total assets $300,000 Total liabilities $200,000 Total stockholders' equity $100,000 Mallard's ratio of liabilities to stockholders' equity is

a.0.50.
b.0.33.
c.2.00.
d.0.67.

Answer 1

The correct answer is c. 2.00.

Step-by-step explanation:

Ratio of liabilities to stockholders' equity is also called debt-to-equity (D/E) ratio and is calculated by dividing a company's total liabilities by its shareholder equity.

Ratio=total liabilities/shareholder equity

In this case,

Total liabilities $200,000

Total stockholders' equity $100,000

Ratio = $200,000/$100,000

Ratio =2.00