Question

2018 2017 Accounts receivable $40,000 $36,000 Inventory 28,000 35,000 Net sales 190,000 186,000 Cost of goods sold 114,000 108,000 Total assets 425,000 405,000 Total stockholders’ equity 240,000 225,000 Net income 32,500 28,000 The 2018 debt to equity ratio is (rounded to one decimal place / put in the number without %):

Answer 1

The answer is 0.77

Step-by-step explanation:

Debt to eqquity ratio is calculated by:

Total liabilities ÷ total equity.

Total assets in 2018 - $425,000

Total equity in 2018 - $240,000

Therefore, total liabilities equal:

Total assets minus total equity

$425,000- $240,000

= $185,000

So debt to equity ratio is:

$185,000 ÷ $240,000

0.77

This means a company used $0.77 in debt for every $1 of equity.