A company with a debt-to-equity (D/E)ratio of 0.5 has:
A)66.66% debt
B)66.66% equity
C)33.33% equity
D)50.00% debt

Question

Quizplus · Accepted Answer

The debt-to-equity ratio is calculated as Debt/Equity. A D/E ratio of 0.5 means that for every $1 of equity, there is $0.5 of debt. This implies that debt constitutes one-third of the total capital (debt + equity), and equity makes up two-thirds, or 66.66%, of the total capital.

A Company with a Debt-To-Equity (D/E)ratio of 0