Opis Company has total assets of $475,000 and total liabilities of $130,000. The company's debt-to-equity ratio is closest to
A) 0.32.
B) 0.21.
C) 0.38.
D) 0.27.

Question

Quizplus · Accepted Answer

Debt-to-equity ratio = Total Liabilities / Total Equity
Total Assets = Total Liabilities + Total Equity

Using the above formulas:
Total Equity = Total Assets - Total Liabilities
Total Equity = $475,000 - $130,000
Total Equity = $345,000

Debt-to-equity ratio = Total Liabilities / Total Equity
Debt-to-equity ratio = $130,000 / $345,000
Debt-to-equity ratio = 0.3768

The closest answer is C) 0.38.

Opis Company Has Total Assets of $475,000 and Total Liabilities