Question

Raya mancillas has determined that her net worth is $43,000, excluding her home. she owes $70,000 on her mortgage and $9,000 on a car loan. what is raya's debt-to-equity ratio?

Answer 1

Raya Mancillas's debt-to-equity ratio is calculated by dividing her total debts of $79,000 (mortgage plus car loan) by her total equity of $43,000, resulting in a ratio of 1.8372.

Step-by-step explanation:

To calculate Raya Mancillas's debt-to-equity ratio, we must first determine her total debts and her total equity. The debts listed are a $70,000 mortgage and a $9,000 car loan. Her equity, excluding her home, is given as $43,000. The debt-to-equity ratio is found by dividing total debts by total equity.

The calculation is as follows:

• Total Debt = Mortgage + Car Loan = $70,000 + $9,000 = $79,000
• Total Equity = $43,000
• Debt-to-Equity Ratio = Total Debt / Total Equity = $79,000 / $43,000

When we do the division, we get the debt-to-equity ratio:

1.8372 (rounded to four decimal places)

This ratio indicates how much debt Raya has compared to her equity. A ratio higher than 1 means she has more debt than equity.