Chapter 3 5. Calculating Leverage Ratios (LO3) Plumas Inc. has a total debt ratio of 0.46....

Question

Question

Answer 1

Answer #1

Let asset be 1, then total debt ratio = 0.46/1

Equity component will be =1-0.46 =0.54.

So debt-equity ratio will be =0.46/0.54

Equity multiplier =Total assets/total equity =1/0.54 = 1.85

Answer 2

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