   Chapter 15.III, Problem 22RE ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# Calculate the amount of owner's equity and the two leverage ratios for the following companies. Company TotalAssets TotalLiabilities Ownor’s Equity Debt-to- Assets Ratio Debt-to- Equity Ratio 22. Gateway Imports $232 , 430$ 115 , 320

To determine

To calculate: The amount of owner’s equity, debt to assets ratio and debt to equity ratio of the company Gateway imports which has total assets of $232,430 and total liabilities of$115,320.

Explanation

Given Information:

The company Gateway imports has total assets of $232,430 and total liabilities of$115,320.

Formula used:

The formula to compute the working capital is,

Owner's equity=Total AssetsTotal liabilities

The formula to compute debt to assets ratio is:

Debt to assets ratio=Total liabilitiesTotal assets

The formula to compute debt to equity ratio is:

Debt to equity ratio=Total liabilitiesOwner's equity

Calculation:

Consider total assets of $232,430, total liabilities of$115,320.

Compute the owner’s equity:

Substitute $232,430 for total assets, and$115,320 for total liabilities in the formula,

Owner's equity=Total AssetsTotal liabilities=$232,430$115,320=$117,110 Hence, owner’s equity is$117,110

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