Shares outstanding of common stock = 1,000,000
Shares outstanding of preferred stock = 500,000
Market price of common stock = $18.
-The Debt to Equity ratio is:
A) 0.31%
B) 2.5 times
C) 1.43 times
D) 0.70%

Question

Shares outstanding of common stock = 1,000,000 
Shares outstanding of preferred stock = 500,000 
Market price of common stock = $18.
-The Debt to Equity ratio is:
A) 0.31% 
B) 2.5 times 
C) 1.43 times 
D) 0.70%

Quizplus · Accepted Answer

The Debt to Equity ratio is calculated as total liabilities divided by shareholders' equity. The correct answer, "2.5 times," indicates that the company's total liabilities are 2.5 times its shareholders' equity. This ratio is a measure of the degree to which a company is financing its operations through debt versus wholly-owned funds.

Shares Outstanding of Common Stock = 1,000,000