Question

At the end of the current year, the following information is available for both pulaski company and scott company.

Pulaski company scott company
Total assets 860,000 440,000
total liabilities 360,000 240,000
total equity 500,000 200,000
comupte the deb to equity ratios for both companies

Answer 1

The Debt to Equity Ratios for Pulaski Company and Scott Company are 0.72 and 1.2, respectively, calculated by dividing each company's total liabilities by their total equity.

Step-by-step explanation:

The Debt to Equity Ratio is calculated by dividing a company’s total liabilities by its shareholder equity.

For Pulaski Company, the Debt to Equity Ratio is computed by dividing total liabilities ($360,000) by total equity ($500,000), which equals 0.72.

Similarly, for Scott Company, the Debt to Equity Ratio is calculated by dividing total liabilities ($240,000) by total equity ($200,000), resulting in a ratio of 1.2.