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4 December, 01:09

Queen, inc., has a total debt ratio of. 32.

a. What is its debt-equity ratio? (do not round intermediate calculations. Round your answer to 2 decimal places,

e. G., 32.16.)

b. What is its equity multiplier? (do not round intermediate calculations. Round your answer to 2 decimal places,

e. G., 32.16.)

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Answers (1)
  1. 4 December, 01:33
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    (A) Debt ratio = 0.32

    Debt / (debt + equity) = 0.32

    Debt = 0.32 * Debt + 0.32 * Equity

    0.68 * Debt = 0.32 * Equity

    Debt = 0.32*Equity/0.68 = 0.32/0.68 * Equity

    Debt / equity ratio = (0.32/068*Equity) / Equity

    Debt/Equity ratio = 0.32/0.68 = 0.47

    Debt-equity ratio = 0.47 (Rounded to 2 decimals)

    (B) Equity multiplier = 1 + debt - equity = 1+0.47 = 1.47

    Equity multiplier = 1.47 (Rounded to 2 decimals)
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