Allen, inc., has a total debt ratio of. 34. what is its debt-equity ratio

Total debt ratio is the ratio of total debt to total assets

i. e

Total debt ratio = Total debt / Total assets

But Total assets is nothing but total equity plus total debt

Now let us consider,

TD = Total debt

TE = Total equity

TA = Total assets

Therefore,

Total debt ratio = TD/TA

But as mentioned above

TA = TD + TE

total debt ratio = Total debt / (total debt+total equity)

total debt ratio =.34 (given)

.34 = TD / (TD + TE)

Solving this equation yields:

0.34 = 1 / (1 + TE/TD)

0.34 (1+TE/TD) = 1

0.34 + 0.34TE/TD = 1

.34 (TE/TD) = 1 - 0.34

0.34 (TE/TD) = 0.66

0.34TE = 0.66TD

Now, Debt equity ratio is the ratio of Total debt to total equity

Debt-equity ratio = TD / TE

Debt-equity ratio = 0.34 / 0.66

Debt-equity ratio = 0.51515152