Market Value ratios Eg 2. Crystal Lake, Inc., has a total debt ratio of 0.36. Its...

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Answer 1

Answer #1

Ans : Debt ratio = 0.36

(a ) Debt ratio = Total debt / total assets

Total assets = total debt + total equity

1 = 0.36 + total equity

Total equity = 1 - 0.36

= 0.64

Debt / Equity = 0.36 / 0.64

debt to equity ratio = 0.5625

(b) Equity multiplier = Total assets / total equity

= 1 / 0.64

= 1.5625 times

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Answer 2

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