On their most recent balance sheet, a company reports total assets of $8 million, common shares of $4 million, and retained earnings of $2 million.The debt-to-equity ratio is:
A)0.33
B)1.00
C)2.00
D)3.00

Question

Quizplus · Accepted Answer

Debt-to-equity ratio = Total debt / Shareholders' equityTotal debt = Total assets - Shareholders' equityShareholders' equity = Common shares + Retained earningsTotal debt = $8 million - ($4 million + $2 million) = $2 millionDebt-to-equity ratio = $2 million / ($4 million + $2 million) = 0.33

On Their Most Recent Balance Sheet, a Company Reports Total