CVD, Inc. has a debt ratio of 50%, and an equity multiplier of 2. What is CVD's stockholders' equity if total debt is $100,000?

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The equity multiplier is defined as total assets divided by total equity. Given an equity multiplier of 2, this means total assets are twice the amount of stockholders' equity. With a debt ratio of 50%, half of the company's assets are financed through debt. If total debt is $100,000, representing 50% of total assets, then total assets are also $200,000. Since the equity multiplier is 2, stockholders' equity, which is half of total assets, is $100,000.

CVD, Inc Has a Debt Ratio of 50%, and an Equity