Leverage ratio: Your company has an equity multiplier of 2.47. What is its debt-to-equity ratio?
A) 0.60
B) 1.47
C) 1.74
D) 0

Name: Leverage ratio: Your company has an equity multiplier of 2.47. What is its debt-to-equity ratio? A) 0.60 B) 1.47 C) 1.74 D) 0
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Question

Quizplus · Accepted Answer

Debt-to-equity ratio = Debt/Equity
Equity multiplier = Total Assets/Total Equity
Therefore, Debt/Equity = (Total Assets/Equity) - 1
Given, equity multiplier = 2.47
Therefore, Debt/Equity = (2.47) - 1 = 1.47

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