Ask Question
BusinessBusiness
8 September, 19:42

If a firm has a debt ratio of 54%, what is the firm's debt to equity ratio?

+2
Answers (1)
  1. 8 September, 19:45
    0
    If a firm has a debt ratio of 54%, then the firm's debt to equity ratio is 117%

    Explanation:

    The Debt Ratio is obtained dividing Liabilities / Assets. Then, a result of 54% means that 54% of the asset is composed by liabilities.

    Liabilities 54

    Assets 100

    Debt Ratio = 54%

    By the general accounting formula we know that

    Assets = Liabilities+Equity. Then,

    Assets (100) = Liabilities (54) + Equity (46)

    If the Debt to equity ratio is calculated by the division of liabilities/Equity - Then:

    Liabilities 54

    Equity 46

    Debt to Equity Ratio = 117%

    This means that for 1 dollar on the Equity the company has 1 dollar plus 17% or 17 cents on the Liabilities.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “If a firm has a debt ratio of 54%, what is the firm's debt to equity ratio? ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
What is the primary purpose of a mission statement
Answers (1)
A local government's utility sells part of its output to the primary government. The utility is accounted for in an enterprise fund. In the comprehensive annual financial report, the sale of the utility's output most likely is accounted for as: a.
Answers (1)
Paid-in Capital in Excess of Par Valuea. is credited when no-par stock does not have a stated value. b. is reported as part of paid-in capital on the balance sheet. c. represents the amount of legal capital. d. normally has a debit balance.
Answers (1)
Wald Inc.'s bonds currently sell for $1,120 and have a par value of $1,000. They pay an $85 annual coupon and have a 20-year maturity, but they can be called in 5 years at $1,050.
Answers (1)
Coronado Company lends Wildhorse Company $9600 on April 1, accepting a four-month, 8% interest note. Coronado Company prepares financial statements on April 30. What adjusting entry should be made before the financial statements can be prepared? A.
Answers (1)
New Questions in Business
Parent sold land to its subsidiary resulting in a gain in 2016, the year of transfer. The subsidiary sold the land to an unrelated third party for a gain in 2019.
Answers (1)
Suppose american winemakers convince the federal government to issue a directive to serve only domestically produced wine at governement functions. This would be an example of.
Answers (1)
If there are external benefits associated with the consumption of a good or service:a. The private demand curve will underestimate the true demand curveb. The market demand curve will be the vertical summation of the individual demand costsc.
Answers (1)
At chaparral steel, delivery times, sales, profits, and customer service and loyalty have been boosted by a system that gives customers electronic access to the mill's inventories. what is the name of this kind of system?
Answers (1)
What is the difference between a layoff and being fired?
Answers (1)
Home » Business » If a firm has a debt ratio of 54%, what is the firm's debt to equity ratio?
Sign Up Forgot Password?