Debt Management Ratios Trina's Trikes, Inc. reported a debt-to-equity ratio of 2 times at the end of 2011. If the firm's total debt at year-end was $10 million, how much equity does Trina's Trikes have?

Question

Quizplus · Accepted Answer

The debt-to-equity ratio is calculated by dividing total debt by equity. Therefore, if the debt-to-equity ratio is 2 times and the total debt is $10 million, the equity is equal to half of the debt, which is $5 million.