Question

Line Corporation's balance sheet showed the following amounts for their liability and stockholders' equity accounts: Current Liabilities, $5,000; Bonds Payable, $1,500; Lease Obligations, $2,000; and Deferred Income Taxes, $300. Total stockholders' equity was $6,000. The debt-to-equity ratio is

Answer 1

1.47

Step-by-step explanation:

Debt to equity ratio = Debt / Equity

Debt to equity ratio = (Current liabilities + Bonds payable + Lease obligations + Deferred income taxes) / Total stockholder's equity

Debt to equity ratio = ($5,000 + $1,500 + $2,000 + $300) / $6,000

Debt to equity ratio = $8,800 / $6,000

Debt to equity ratio = 1.47