Question

If a company has total assets of $2,000, current assets of $500, current liabilities of $750, and total liabilities of $1,200, what is the company's debt-to-equity ratio?

-0.625

-0.375

-0.600

-1.500

Answer 1

The company's debt-to-equity ratio is calculated by subtracting the total liabilities from the total assets to find the equity and then dividing the total liabilities by the equity. In this case, the ratio is -1.500.

Step-by-step explanation:

If a company has total assets of $2,000, current assets of $500, current liabilities of $750, and total liabilities of $1,200, we need to calculate the company's debt-to-equity ratio.

To find the equity, subtract the total liabilities from the total assets:

Equity = Total Assets - Total Liabilities
Equity = $2,000 - $1,200
Equity = $800

The debt-to-equity ratio is calculated by dividing the total liabilities by the total equity:

Debt-to-Equity Ratio = Total Liabilities / Equity
Debt-to-Equity Ratio = $1,200 / $800
Debt-to-Equity Ratio = 1.5

Therefore, the company's debt-to-equity ratio is -1.500.