The Fabric House has sales of $411,800,total equity of $237,400,and a debt-equity ratio of .55.What is the capital intensity ratio?
A).89
B).83
C)1.06
D)1.20
E)1.27

Question

Quizplus · Accepted Answer

The capital intensity ratio is calculated as total assets divided by sales. First, calculate total assets using the debt-equity ratio: Total Assets = Total Equity + Total Debt. Total Debt = 0.55 * Total Equity = 0.55 * $237,400 = $130,570. Total Assets = $237,400 + $130,570 = $367,970. Capital Intensity Ratio = Total Assets / Sales = $367,970 / $411,800 ≈ 0.89.

The Fabric House Has Sales of $411,800,total Equity of $237,400,and