Stewart Inc.'s latest EPS was $3.50,its book value per share was $22.75,it had 215,000 shares outstanding,and its debt ratio was 46%.How much debt was outstanding?

Question

Quizplus · Accepted Answer

First, we need to find the total equity:
Total Equity = Book Value per Share x Number of Shares Outstanding
Total Equity = $22.75 x 215,000
Total Equity = $4,893,750

Next, we can use the debt ratio to find the total debt:
Debt Ratio = Total Debt / Total Assets
0.46 = Total Debt / (Total Debt + Total Equity)
0.46 = Total Debt / ($4,893,750 + Total Debt)
0.46(Total Debt + $4,893,750) = Total Debt
0.46Total Debt + $2,251,625 = Total Debt
0.54Total Debt = $2,251,625
Total Debt = $4,166,620

Therefore, the answer is D. $4,166,620.