The debt-to-equity ratio is calculated by dividing
A) current liabilities by owners' equity.
B) total liabilities by owners' equity.
C) long-term liabilities by retained earnings.
D) total liabilities by retained earnings.
E) long-term liabilities by owners' equity.

Question

Quizplus · Accepted Answer

The debt-to-equity ratio is a financial ratio that measures the amount of debt a company has compared to the amount of equity. It is calculated by dividing total liabilities (all debts the company owes) by owners' equity (the amount of money shareholders have invested in the company). Therefore, the correct choice is B, total liabilities by owners' equity.

The Debt-To-Equity Ratio Is Calculated by Dividing