Trina'sTrikes, Inc. reported a debt-to-equity ratio of 2 times at the end of 2013. 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 as total debt divided by total equity. Rearranging the formula, we get equity = total debt / debt-to-equity ratio. Substituting the given values, we get equity = $10 million / 2 = $5 million. Therefore, the answer is B.