The formula for calculating the debt-to-equity ratio is
A)total liabilities divided by total stockholders' equity.
B)total liabilities divided by stockholders' equity provided by preferred stockholders.
C)long-term liabilities divided by total stockholders' equity.
D)long-term liabilities divided by stockholders' equity provided by preferred stockholders.

Question

Quizplus · Accepted Answer

The debt-to-equity ratio is a financial ratio that measures the amount of debt used to finance a company's assets relative to the amount of equity. Total liabilities represent all of a company's debts and obligations, while total stockholders' equity represents the residual interest of the owners in the assets of the company after all liabilities have been paid. Therefore, the formula for calculating the debt-to-equity ratio is total liabilities divided by total stockholders' equity.

The Formula for Calculating the Debt-To-Equity Ratio Is