Your firm has an equity multiplier of 2.47. What is its debt-to-equity ratio? Round your final answer to two decimal places.
A) 0.60
B) 1.47
C) 1.74
D) 3.47

Question

Quizplus · Accepted Answer

The equity multiplier is calculated as total assets divided by total equity, which is equal to 1 plus the debt-to-equity ratio. Therefore, if the equity multiplier is 2.47, the debt-to-equity ratio is 2.47 - 1 = 1.47.

Your Firm Has an Equity Multiplier of 2