Question

Charger Company's most recent balance sheet reports total assets of $31,598,000, total liabilities of $18,648,000 and total equity of $12,950,000. The debt to equity ratio for the period is (rounded to two decimals):

Answer 1

1.44

Step-by-step explanation:

A debt-equity can be defined as a measure of the ratio of the total liabilities held by a company to its shareholder's equity. The debt-equity ratio can be found in a company's balance sheet and it's typically a strategic approach used to assess or evaluate the risks that are associated with a company's financing structure.

Given the following data;

Total assets = $31,598,000.

Total liabilities = $18,648,000.

Total equity = $12,950,000.

To find the debt-equity ratio;

`Debt-equity \; ratio = \frac {Total \; liability}{Total \; equity}`

Substituting into the equation, we have;

`Debt-equity \; ratio = \frac {18,648,000}{12,950,000}`

Debt-equity ratio = 1.44

Therefore, the debt to equity ratio for the period is 1.44.