Chapter 8, Problem 8.9.2MBA

### Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

Chapter
Section

### Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

# Debt and price-earnings ratios Lowe's Companies Inc. (LOW) operates over 1,800 home improvement retail stores and is a competitor of The Home Depot (HD). The following data (in millions) were adapted from a recent financial statement of Lowe's: 2. Given your answer lo pan (1), what is the ratio of Stockholders' equity to total assets? Round to one decimal place.

To determine

Concept Introduction:

Debt Ratio:

Debt ratio is the relationship between the Total liabilities and Total Assets of a corporation. Debt ratio shows the part of assets financed by debts. It is calculated by dividing total liabilities by total assets. The formula of debt ratio is as follows:

Debt Ratio = Total LiabilitiesTotal Assets

To Calculate:

The Stockholder's Equity to total asset ratio using the Debt Ratio

Explanation

The Stockholder's Equity to total asset ratio using the Debt Ratio is calculated as follows:

 $in Millions Total Liabilities (A)$21,859

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