If a company has a liabilities to equity ratio of 0.5,then its assets to equity ratio is

Question

Quizplus · Accepted Answer

Liabilities to equity ratio = 0.5
This means for every $1 of equity, the company has $0.5 of liabilities.
Therefore, the assets to equity ratio can be calculated as follows:

Assets to equity ratio = (Liabilities + Equity) / Equity
Assets to equity ratio = (0.5 + 1) / 1
Assets to equity ratio = 1.5

Hence, the best choice is C) 1.5.

If a Company Has a Liabilities to Equity Ratio of 0.5,then