Ajax Corporation has $10 million in debt and $75 in equity. The debt to equity ratio in lowest terms is 2:15.

Question

Quizplus · Accepted Answer

The debt to equity ratio is calculated as $10 million in debt divided by $75 million in equity, which simplifies to 2:15, not $75 in equity. If it's $75 in equity, the calculation would be incorrect; assuming the equity is actually $75 million, the ratio would be 2:15, but the question seems to imply $75, not $75 million, which would lead to a misunderstanding.

Ajax Corporation Has $10 Million in Debt and $75 in Equity