178k views
1 vote
Rajan Company's most recent balance sheet reported total assets of $2.10 million, total liabilities of $0.70 million, and total equity of $1.40 million. Its Debt to equity ratio is:

User Wdberkeley
by
7.1k points

1 Answer

0 votes

Answer:

0.5.

Step-by-step explanation:

Assets - Liabilities = Owner's Equity.

As the name states, the debt to equity ratio is simply obtained by dividing total debt (liabilities) by the total equity, total assets should not be included:


DER = (0.70)/(1.40) =0.5

Rajan Company's debt to equity ratio is 0.5.

User Thiago Falcao
by
7.7k points