Answered: A company has an equity multiplier of…

A company has an equity multiplier of 3.2, and its assets are financed with some combination of long-term debt and common equity. What is its debt to asset ratio?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 24MCQ: When analyzing a companys debt to equity ratio, lithe ratio has a value that is greater than one,...

See similar textbooks

Related questions

Q: Calculate the equity multiplier of the ABC Company if the total debt ratio of is 1.5

A: The given total debt ratio can also be written as : =TOTAL DEBT / TOTAL ASSETS

Q: A company finances its operations and growth opportunities, using common equity and debt. The…

A: The WACC is stands for weighted average cost of capital. The weighted average cost of capital is…

Q: Bartley Barstools has an equity multiplier of 3.8, and its assets are financed with some combination…

A: Debt to assets ratio is used to evaluate the relationship between the total liabilities and total…

Q: Calculate the following ratios from balance sheet statement for any organization: • Current ratio •…

A: The current and debt ratio is as follows: The resultant table is as follows:

Q: The Wilson Corporation has the following relationships: Sales/Total assets 2.0 Return on assets…

A: Profit margin is the percentage of profit on total sales. Debt ratio refers to the total percentage…

Q: The leverage ratio is equal to average total __________divided by average _________________.a.…

A: Leverage ratio: It overlooks the mixture of debt and equity which is required for analyzing the…

Q: Assume you are given the following relationships for the Haslam Corporation:Sales/total assets…

A: To solve the question, we need to determine the equity multiplier, then debt to equity ratio and…

Q: Queen, Inc., has a total debt ratio of .22. a. What is its debt-equity ratio? b. What…

A: Information Provided: Total debt ratio = 0.22

Q: Raskin LLC has a debt-equity ratio of 1.38. What is the equity multiplier?

A: The ratio that shows the portion of the assets that are financed by equity is term as the equity…

Q: leverage ratio is equal to average total …… divided by average…… Select one: a. assets; common…

A: Solution: leverage ratio = Average total debt / Average total common stpckholders' equity therefore,…

Q: Which of the following statement is correct? Select one: a. Return on assets is the ratio of net…

A: The ratio is the measure of a relationship between two figures. In accounting, ratio analysis is…

Q: . A firm, its debt, and equity have β of 1.0, 0.5, and 3.0, respectively. What is the firm’s equity…

A: The question is based on the concept of firm (asset) beta calculation and equity ratio.

Q: The current ratio is O a solvency measure that indicates the margin of safety for bondholders O…

A: Note: Since you have asked multiple question, we will solve the first question for you. If you want…

Q: If I remember correctly, the DuPont equation breaks down our ROE into three component ratios: the…

A: Dupont Equation: Return on equity = Net profit margin * Total asset turnover ratio * Equity…

Q: The relative proportion of debt, equity, and other securities that a firm has outstanding constitute…

A: Capital structure refers to the amount of money invested in a busines. this amount of money can be…

Q: How do you determine the mix (percentages or weights) of debt vs equity from the Debt to Equity…

A: A company has several sources from where it can raise funds. It can issue equity shares and the…

Q: Fox company has a ratio of (total debt/total assets) that is above the industry average,and a ratio…

A: The correct option with proper explanation are as follows

Q: The specific financial aspects to be considered with your analysis are: • Profit Margin • Total…

A: Ratio analysis help to understand the company liquidity, solvency and Profitability capacity.

Q: Show the DuPont framework’s calculation of the three components of return on equity. What…

A: DuPont framework: DuPont framework is an equation, which provides a convenient basis for analysis…

Q: Find the working capital ratio, Quick Ratio, eatnings per share (EPS), Debt- equity ratio with the…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: When is the return on assets equal to the return on equity? a. When the company issues equal…

A: Return on assets and Return on equity : Return on assets and Return on equity are two ratios that…

Q: Please see below Company W's current financial ratios: Dividend payout ratio = 66% Internal growth…

A: Dividend Payout Ratio = 66% Growth Rate = 11% Profit Margin = Profit / Sales = 8.6% Total Assets to…

Q: Requirement 1. Compute the FINANCIAL ratios that measure a. Liquidity • Current ratio • Quick ratio…

A: As per our guidelines, we are supposed to answer only 3 sub parts. For balance answer, please…

Q: Which of the following statements is CORRECT? A. Net working capital is defined as current assets…

A: The question is multiple choice question. Gross Working Capital is the amount invested in Current…

Q: A firm has an ROE of 3%, a debt-to-equity ratio of .5, and a tax rate of 35% and pays an interest…

A: ROE=3% Debt to equity ratio = 0.5 Tax rate = 35% Interest Rate = 6%

Q: Assume Lavender Corporation has a market value of $4 billion of equity and a market value of $19.8…

A: Therefore, the weight of equity for calculating the WACC is 16.81%.

Q: If the market value of debt is $104,730, market value of preferred stock is $65,224, and market…

A: Given information: Market value of debt is $104,730 Market value of preferred stock is $65,224…

Q: A firm has a debt -to -equity of 0.69 and a market -to- book ratio of 3.0. What is the ratio of the…

A: Given: Debt to equity = 0.69 Market value of equity to book value of equity ratio = 3

Q: You are trying to assess the well-being of the common stockholders of a company. Which of the…

A: Step 1 Accounting ratios, an important sub-set of financial ratios, are a group of metrics used to…

Q: According to DuPont analysis, the impact of debt on a company's profitability is measured by the.…

A: Dupont analysis is a framework to analyze Fundamental performance of a corporation.

Q: What are two ratios indicating how well the company manages its debt ?.

A: Ratio analysis means where different ratio of various years of years companies has been compared and…

Q: Assuming Target’s industry had an average current ratio of 1.0 and an average debtto equity ratio of…

A: Current ratio of the company means ratio of current assets with current liabilities. It means how…

Q: Indicate whether the following are a measure of (a) liquidity, (b) profitability, or (c) leverage.…

Q: Aurelia Industries has a debt to asset ratio of 0.66. Their equity multiplier is:

A: The ratio that shows the portion of the assets that are financed by equity is term as the equity…

Q: A firm has a debt-to-equity of 0.57. What is the debt-to-total assets ratio?

A: Given:Debt to equity or D/E = 0.57A = Total assetsD/A = debt to total assets

Q: ST-4 Sheth Corporation has a return on assets ratio of 6 percent. If the debt to total assets ratio…

A: Return on Assets Ratio = 6% Debt to Total Asset Ratio = 0.50 Required What is the firm's return on…

Q: A firm has a debt-to-equity ratio of 2. What is its equity multiplier?

A: Debt to equity ratio = Total debt / Total equity Debt ratio of 2 means debt is 2 times of equity…

Q: What do the following ratios reveal about the financial health of a company? And how do I calculate…

A: Long Term Debt Paying Ability Ratios are also known as Leverage or Capital Structure Ratios. These…

Q: What is the equity multiplier if the total assets are $9,878.20 and total shareholder equity is…

A: Information Provided: Total assets = $9878.20 Total share holder equity = $6230.20

Q: Compute the following ratios for both companies for the current year, and decide which company’s…

A: Ratio analysis is a very important technique of choosing between two investment opportunities. Some…

Question

A company has an equity multiplier of 3.2, and its assets are financed with some combination
of long-term debt and common equity. What is its debt to asset ratio?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step 5

Trending now

This is a popular solution!

Step by step

Solved in 5 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

When analyzing a companys debt to equity ratio, lithe ratio has a value that is greater than one, then the company has: a. equal amounts of debt and equity. c. less debt than equity. b. more debt than equity. d. none of these.
The cost of equity is _______. A. the interest associated with debt B. the rate of return required by investors to incentivize them to invest in a company C. the weighted average cost of capital D. equal to the amount of asset turnover
Assume you are given the following relationships for the Haslam Corporation: Calculate Haslam’s profit margin and liabilities-to-assets ratio. Suppose half its liabilities are in the form of debt. Calculate the debt-to-assets ratio.
Define each of the following terms: Weighted average cost of capital, WACC; after-tax cost of debt, rd(1 – T); after-tax cost of short-term debt, rstd(1 – T) Cost of preferred stock, rps; cost of common equity (or cost of common stock), rs Target capital structure Flotation cost, F; cost of new external common equity, re
The following is selected financial data from Block Industries: How much does Block Industries have in current liabilities? A. $19,800 B. $18,300 C. $12,300 D. $25,800
Calculate the projected debt ratio, debt-to-equity ratio, liabilities-to-assets ratio, times-interest-earned ratio, and EBITDA coverage ratios. How does Computron compare with the industry with respect to financial leverage? What can you conclude from these ratios?
Bartley Barstools has an equity multiplier of 3.8, and its assets are financed with somecombination of long-term debt and common equity. What is its debt to asset ratio?
F&G Co. has an equity multiplier of 2.4, and its assets are financed with some combination of long-term debt and common equity. What is its debt-to-assets ratio?
The ratio of liabilities to stockholders' equity measures how much of the company is financed by debt and equity. It is computed as follows: To illustrate, the ratio of liabilities to stockholders' equity for Lincoln Company is computed as follows Current Assets - CurrentLiabilities = Calculated Value 1. Working capital: Ratio Numerator ÷ Denominator = Calculated Value 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days' sales in receivables 6. Inventory turnover 7. Number of days' sales in inventory 8. Ratio of Fixed assets to long-term liabilities…
Calculate the equity multiplier of the ABC Company if the total debt ratio of is 1.5
. A firm, its debt, and equity have β of 1.0, 0.5, and 3.0, respectively. What is the firm’s equity ratio?
Queen, Inc., has a total debt ratio of .22. a. What is its debt-equity ratio? b. What is its equity multiplier?