Lasch Corporation has provided the following financial data from its balance sheet and income statement:

-The company's equity multiplier at the end of Year 2 is closest to:
A) 1.60
B) 1.68
C) 0.63
D) 0.60

Question

Lasch Corporation has provided the following financial data from its balance sheet and income statement:
  
-The company's equity multiplier at the end of Year 2 is closest to:
A) 1.60 
B) 1.68 
C) 0.63 
D) 0.60

Quizplus · Accepted Answer

Equity multiplier = Average total assets* ÷ Average stockholders' equity*
= $1,326,500 ÷ $827,500 = 1.60 (rounded)
*Average total assets = ($1,333,000 + $1,320,000) ÷ 2 = $1,326,500
**Average stockholders' equity = ($835,000 + $820,000) ÷ 2 = $827,500

Lasch Corporation Has Provided the Following Financial Data from Its