Will's Wheels, Inc. reported a debt-to-equity ratio of 0.65 times at the end of 2013. If the firm's total debt at year-end was $5 million, how much equity does Will's Wheels have?

Question

Quizplus · Accepted Answer

The debt-to-equity ratio is calculated as Total Debt / Total Equity. Given the ratio is 0.65 and Total Debt is $5 million, we can set up the equation: 0.65 = $5 million / Total Equity. Solving for Total Equity gives Total Equity = $5 million / 0.65 = $7.69 million.