Backstreet Books,a small eclectic bookstore in a bustling college town wants to open another store at the west end of campus.Allison Robards,the store owner,plans to visit her banker in the hopes of obtaining additional financing.In preparation for her visit,the banker asks her for the following information: Calculate the debt to equity ratio for Backstreet Books.

Question

Backstreet Books,a small eclectic bookstore in a bustling college town wants to open another store at the west end of campus.Allison Robards,the store owner,plans to visit her banker in the hopes of obtaining additional financing.In preparation for her visit,the banker asks her for the following information: Calculate the debt to equity ratio for Backstreet Books.
Backstreet Books,a small eclectic bookstore in a bustling college town wants to open another store at the west end of campus.Allison Robards,the store owner,plans to visit her banker in the hopes of obtaining additional financing.In preparation for her visit,the banker asks her for the following information: Calculate the debt to equity ratio for Backstreet Books. A) 250% B) 105% C) 75% D) 30%

Quizplus · Accepted Answer

The debt to equity ratio can be calculated as total liabilities divided by total equity. Without knowing the exact numbers for Backstreet Books, we can assume that a small bookstore may have more debt than equity. Therefore, a ratio higher than 100% (indicating more debt than equity) is possible. Choice B is the closest to this assumption and is therefore the best choice.

Backstreet Books,a Small Eclectic Bookstore in a Bustling College Town