The balance sheet for Jim's Hardware has the following items listed.Current Liabilities,$25,345;Long Term Debt,$100,000;Total Liabilities,$125,345;Total Assets,$325,490.What is the Debt to Equity Ratio for this company?
A)0)198
B)0)307
C)0)626
D)0)499
E)0)385

Question

Quizplus · Accepted Answer

The Debt to Equity Ratio is calculated by dividing Total Liabilities by Total Equity. The formula is Debt to Equity Ratio = Total Liabilities / Total Equity. To find out Total Equity, we need to subtract Total Liabilities from Total Assets. Total Equity = Total Assets - Total Liabilities. So, Total Equity = $325,490 - $125,345 = $200,145. Therefore, Debt to Equity Ratio = $125,345 / $200,145 = 0.626 (rounded to three decimal places). The closest choice to this answer is C.

The Balance Sheet for Jim's Hardware Has the Following Items