Question

Osier company reported total assets of $4,200,000, total liabilities of $700,000, and total stockholders’ equity of $3,500,000 at the end of the year and total sales of $15,000,000 during the year. what is the company’s debt-to-equity ratio?

Answer 1

The debt-to-equity ratio of Osier Company is calculated by dividing its total liabilities of $700,000 by its total stockholders' equity of $3,500,000, resulting in a ratio of 0.2, or 20%.

Step-by-step explanation:

To calculate the debt-to-equity ratio for Osier Company, we divide the total liabilities by the total stockholders' equity. According to the information provided, Osier Company has total liabilities of $700,000 and total stockholders' equity of $3,500,000.

Here is the step-by-step calculation:

1. Identify total liabilities: $700,000
2. Identify total stockholders' equity: $3,500,000
3. Divide total liabilities by total stockholders' equity: $700,000 / $3,500,000
4. Calculate the ratio: 0.2 or 20%

This means that for every dollar of equity, Osier Company has $0.20 in debt. The debt-to-equity ratio is 0.2 or 20%.