Following is financial statement information for Rogex Corporation: cash = $242; accounts receivable = $850; inventory = $820; net fixed assets = $3,408; accounts payable = $700; short-term notes payable = $740; long-term liabilities = $1,100; common stock = $1,160; and retained earnings = $1,620. What is the debt-to-equity ratio for Rogex?
A)0.91
B)2.15
C)0.48
D)1.12

Question

Quizplus · Accepted Answer

The debt-to-equity ratio is calculated as total liabilities divided by total shareholders' equity. Total liabilities = short-term notes payable ($740) + long-term liabilities ($1,100) + accounts payable ($700) = $2,540. Shareholders' equity = common stock ($1,160) + retained earnings ($1,620) = $2,780. Debt-to-equity ratio = $2,540 / $2,780 = 0.91.

Following Is Financial Statement Information for Rogex Corporation: Cash =