Question

A company's total liabilities divided by its total stockholders' equity is called the:

a. Pledged assets to secured liabilities ratio.
b. Equity ratio.
c. Return on total assets ratio.
d. Debt-to-equity ratio.
e. Times secured liabilities earned ratio.

Answer 1

d. Debt-to-equity ratio.

Explanation: Debt to equity ratio in a company is the total liabilities of the company divided by the equity of shareholders. This number reflects on the balance sheet on the financial statement of the company.

It is used in corporate finance to determine how a company raises funds for its operation through debts or against owned funds.

Debt-to-equity ratio= liabilities ÷ shareholders equity.