Brief Exercise Ratio Analysis
Whitten Corporation’s balance sheet shows the following amounts: current assets, $200,000; current liabilities, $80,000; bonds payable, $155,000; and lease obligations. $25,000. Total stockholders’ equity is $120,000.
Required:
Calculate the debt to equity ratio. (Note: Round to two decimal places.)
Debt to Equity Ratio:
Debt to equity ratio is calculated to determine the leverage position of the company. It compares the total liabilities of the company with it total shareholders’ equity. The debt to equity ratio is calculated by dividing the Total Liabilities by Total Stockholder’s Equity. The formula to calculate Debt to equity ratio is as follows:
To calculate:
The debt to equity ratio.
The debt to equity ratio is calculated as follows:
Total Liabilities = Current Liabilities + Bonds Payable + Lease Obligatio...
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