Question

Charger Company's most recent balance sheet reports total assets of $27,000,000, total liabilities of $15,000,000 and total equity of $12,000,000. The debt to equity ratio for the period is (rounded to two decimals):

Answer 1

The answer is 1.25

Step-by-step explanation:

Debt to equity ratio tells us about how a company is running its business through borrowed money or contribution from its owners(equity). The ratio shows how healthy a company is.

Debt to equity ratio is total liability (debt) ÷ total equity.

Here, total liability(debt) will be our total debt.

Total liabilities(debt) = $15,000,000

Total equity = $12,000,000

So we have;

$15,000,000/$12,000,000

=1.25