Recent financial statement data for Harmony Health Foods (HHF) Inc. is shown below. Current liabilities $ 188 Income before interest and taxes $ 117 10% Bonds, long-term 370 Interest expense 37 Total liabilities 558 Income before tax 80 Shareholders' equity Income tax 28 Common stock 204 Net income $ 52 Retained earnings 294 Total shareholders' equity 498 Total liabilities and equity $ 1,056 HHF's debt to equity ratio is (Round your answer to 2 decimal places.) : Multiple Choice 1.89. 1.12. 0.74. 0.55.

Question

Leonardo Nelson

Business

6 October, 01:54

Recent financial statement data for Harmony Health Foods (HHF) Inc. is shown below. Current liabilities $ 188 Income before interest and taxes $ 117 10% Bonds, long-term 370 Interest expense 37 Total liabilities 558 Income before tax 80 Shareholders' equity Income tax 28 Common stock 204 Net income $ 52 Retained earnings 294 Total shareholders' equity 498 Total liabilities and equity $ 1,056 HHF's debt to equity ratio is (Round your answer to 2 decimal places.) : Multiple Choice 1.89. 1.12. 0.74. 0.55.

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Semaj Pope · Answer 1

0.74

Explanation:

The debt to equity ratio is a financial measure that shows how much of the company's activities is funded by long term debt or non current liabilities compared to the owner's equity.

A company with an element of long term debt financing is said to be geared. The higher the long term debt to equity ratio, the more geared the company is.

Debt to equity ratio is the ratio of debt to equity

= 370/498

= 0.74