Alexander Corp.has the following balances as on December 31,2015: Calculate the debt to equity ratio.(Round your answer to two decimal points.)

Question

Alexander Corp.has the following balances as on December 31,2015:  Calculate the debt to equity ratio.(Round your answer to two decimal points.)

Quizplus · Accepted Answer

Debt to Equity Ratio = Total Debt / Total Equity
Total Debt = Long-term Debt + Short-term Debt = $213,500 + $68,000 = $281,500
Total Equity = Share Capital + Retained Earnings = $200,000 + $128,400 = $328,400
Debt to Equity Ratio = $281,500 / $328,400 = 0.857 or 1.54 (rounded to two decimal points)
Therefore, the best choice is option C with a debt to equity ratio of 1.54.