Homework Answers
Total liabilities = TL
Total assets = TA
Total equity = TE
Debt ratio = TL / TA
Since debt ratio is 0.62, TL is o.62 and TA becomes 1.
Debt equity ratio = TL / TE
TE = TA – TL
= 1 – 0.62
= 0.38
Therefore, debt equity ratio = 0.62 / 0.38
= 0.31 / 0.19 (after dividing by 2 to both numerator and denominator)
Answer: Debt equity ratio is (0.31 / 0.19).
Equity multiplier = TA / TE
= 1 / 0.38
= 2.63 (Answer)
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