Question

Rajan company's most recent balance sheet reported total assets of $1.9 million, total liabilities of $0.8 million, and total equity of 1.1 million. its debt to equity ratio is:

a) 0.42

b) 0.58

c) 1.38

d) 0.73

e) 1.00

Answer 1

d) 0.73

Step-by-step explanation:

Debt to equity ratio is a financial measurement to gives insights into how much of an entity's operation are funded by debt and owners funds (equity).

Given that Rajan company's most recent balance sheet had the following;

Total asset = $1.9 million

Total liabilities = $0.8 million

Total equity = $1.1 million

Debt to equity ratio = $0.8 million/$1.1 million

= 0.73

Answer 2

Debt to equity ratio of Rajan company is d) 0.73

Step-by-step explanation:

The debt-to-equity (D/E) ratio compares a company’s total debt to its total equity and can be used to evaluate how much leverage a company is using.

Debt-to-equity ratio is calculated by using formula:

Debt-to-equity ratio = Total debt (or liabilities)/Total equity

Rajan company's most recent balance sheet reported total liabilities of $0.8 million, and total equity of 1.1 million

Debt-to-equity ratio = $800,000/$1,100,000 = 0.73