Question

​Surround, Inc. provides the following​ data: ​Surround, Inc. Comparative Balance Sheet Dec.​ 31, 2019 Assets Current​ Assets: Cash and Cash Equivalents ​$29,000 Account​ Receivable, Net ​31,000 Merchandise Inventory ​53,000 Total Current Assets ​$113,000 ​Property, Plant, and​ Equipment, Net ​120,000 Total Assets ​$233,000 Liabilities Current​ Liabilities: Accounts Payable ​$4,300 Notes Payable ​2,900 Total Current Liabilities ​$7,200 ​Long-term Liabilities ​90,000 Total Liabilities ​$97,200 ​ Stockholders' Equity Common Stock ​$31,000 Retained Earnings ​104,800 Total​ Stockholders' Equity ​$135,800 Total Liabilities and​ Stockholders' Equity ​$233,000 Calculate the debt to equity ratio.

Answer 1

0.715

Step-by-step explanation:

The Debt To equity Ratio is given as:

⇒ ( Debt ) ÷ ( Equity )

Here,

Debt = Long term liability + Total Current Liabilities ​

= $90,000 + $7,200

= $97,200

and,

Equity = Common stock + Retained earnings

= $31,000 + $104,800

= $135,800

Therefore, we get the

Debt to equity ratio = $97,200 ÷ $135,800

= 0.715