Tierre's Ts, Inc. reported a debt to equity ratio of 3 times at the end of 2013. If the firm's total assets at year-end are $15 million, how much of their assets is financed with equity?

Question

Quizplus · Accepted Answer

The debt to equity ratio of 3 means that for every $1 of equity, there is $3 of debt. Therefore, the equity is 1/4 of the total financing (equity + debt). If total assets are $15 million, then equity is $15 million / 4 = $3.75 million.