Question

The debt-to-equity ratio for your small business was 1.40 at the end of last year and 1.25 at the end of this year. Your debt-to-equity ratio is:_________

Answer 1

The debt to equity ratio is 1.25

Step-by-step explanation:

The computation of the debt to equity ratio is shown below:

Debt to equity ratio = Debt ÷ equity

Given that

Last year debt to equity ratio = 1.40

And, this year the debt to equity ratio = 1.25

Based on the above information, the debt to equity ratio is 1.25

As we can assume that the question ask for the current year so the debt to equity ratio is 1.25

It also shows the relationship between the debt and equity