Financial statements for Narstad Corporation appear below: Narstad Corporation's debt-to-equity ratio at the end of Year 2 was closest to:
A) 0.50
B) 0.36
C) 0.19
D) 0.17

Question

Financial statements for Narstad Corporation appear below:  Narstad Corporation's debt-to-equity ratio at the end of Year 2 was closest to:
A) 0.50 
B) 0.36 
C) 0.19 
D) 0.17

Quizplus · Accepted Answer

Debt-to-equity ratio = Total liabilities / Total equity
At the end of Year 2, Narstad Corporation's debt-to-equity ratio = ($300,000 + $100,000) / $1,000,000 = 0.4
Therefore, the closest answer choice is B) 0.36.

Financial Statements for Narstad Corporation Appear Below: Narstad Corporation's