asked 208k views
2 votes
Compute the debt-to-total-value ratio for a firm that has a debt-to-equity ratio of 2.Multiple Choice:A. 1/3B. 2/5C. 3/2D. 2/3

1 Answer

2 votes

Answer:

D. 2/3

Step-by-step explanation:

The Debt to total value ratio is found by dividing the total debt by total equity plus total debt. It is written as

D/(D+E)

In this question we are already given the debt to equity ratio which is 2, this means that the debt is twice the amount of equity. We can use this ratio to find the debt to total value ratio. If we take debt as 2, then equity will be half its amount which is 1. So now we can calculate the Debt to total Value ratio.

D=2

D+E= 3

Debt to total value ration = 2/3

answered
User Piyush Sanepara
by
8.2k points

Related questions

1 answer
2 votes
165k views
Welcome to Qamnty — a place to ask, share, and grow together. Join our community and get real answers from real people.