Keystone Corporation's balance sheet showed the following liability and stockholders' equity amounts: Current Liabilities, $100,000; Bonds Payable, $150,000; Long-Term Lease Obligations, $20,000; Deferred Income Tax Liability, $5,000; and total stockholders' equity, $500,000. The debt-to-equity ratio is

Question

Quizplus · Accepted Answer

To calculate the debt-to-equity ratio for Keystone Corporation, we need to sum up all the liabilities and then divide by the total stockholders' equity.
The liabilities given are:
- Current Liabilities: $100,000
- Bonds Payable: $150,000
- Long-Term Lease Obligations: $20,000
- Deferred Income Tax Liability: $5,000
Total Liabilities = Current Liabilities + Bonds Payable + Long-Term Lease Obligations + Deferred Income Tax Liability
Total Liabilities = $100,000 + $150,000 + $20,000 + $5,000
Total Liabilities = $275,000
The total stockholders' equity is given as $500,000.
Now, we calculate the debt-to-equity ratio:
Debt-to-Equity Ratio = Total Liabilities / Total Stockholders' Equity
Debt-to-Equity Ratio = $275,000 / $500,000
Debt-to-Equity Ratio = 0.55
Therefore, the debt-to-equity ratio for Keystone Corporation is 0.55, which corresponds to option d.

Keystone Corporation's Balance Sheet Showed the Following Liability and Stockholders