The debt-to-equity ratio is:
A)calculated by dividing total liabilities by net worth.
B)calculated by dividing monthly debt payments by net monthly income.
C)determined by dividing your assets by your liabilities.
D)a useless ratio for determining your credit capacity.
E)rarely used by creditors in determining credit worthiness.

Question

Quizplus · Accepted Answer

The debt-to-equity ratio is calculated by dividing a company's total liabilities by its shareholder equity (net worth), which provides a measure of the company's financial leverage and its ability to meet its debt obligations.

The Debt-To-Equity Ratio Is