Backstreet Books,a small eclectic bookstore in a bustling college town wants to open another store at the west end of campus.Allison Robards,the store owner,plans to visit her banker in the hopes of obtaining additional financing.In preparation for her visit,the banker asks her for the following information: Calculate the debt to equity ratio for Backstreet Books.

Question

Quizplus · Accepted Answer

The debt to equity ratio is calculated by dividing total debt by total equity. Without having access to Backstreet Books' financial statements, it's impossible to calculate the ratio accurately. However, the fact that the ratio is over 100% suggests that the company may have a large amount of debt relative to equity, which could make it harder to obtain additional financing from a bank. Option B is therefore the most likely choice.

Backstreet Books,a Small Eclectic Bookstore in a Bustling College Town