Final answer:
The debt to equity ratio compares a company's total debt to its total equity to determine the extent to which the company relies on creditors versus shareholders for financing. In this case, the debt to equity ratio is 3.33, indicating a reliance on creditors.
Step-by-step explanation:
The debt to equity ratio compares a company's total debt to its total equity. It indicates the proportion of financing provided by creditors (debt) versus shareholders (equity). The formula to calculate the debt to equity ratio is:
Debt to Equity Ratio = Total Debt / Total Equity
In this case, the total debt is the sum of bonds and loans, which is 50+50=100. The total equity is 30. Therefore, the debt to equity ratio is:
Debt to Equity Ratio = 100 / 30 = 3.33
Since the debt to equity ratio is greater than 1, it indicates that the company relies more on creditors (debt) to finance its operations than on shareholders (equity).