Question

Charger company's most recent balance sheet reports total assets of $30,107,000, total liabilities of $17,457,000 and total equity of $12,650,000. the debt to equity ratio for the period is (rounded to two decimals):

Answer 1

The debt to equity ratio (D/E ratio) gives us an indicator on how much debt a company is using to finance its assets in relative to the quantity of value represented in shareholders' equity. This is calculated by dividing total liabilities with total equity:

D/E ratio = $17,457,000 / $12,650,000

D/E ratio = 1.38