Question

Charger Company's most recent balance sheet reports total assets of $27,000,000, total liabilities of $15,000,000 and total equity of $12,000,000. The debt to equity ratio for the period is (rounded to two decimals):a)1.80 b)0.80 c)1.25 d)0.44 e)0.56

Answer 1

Answer:

The option C is correct option - 1.25

Explanation:

Given:

The total amount of assets in Charger company's balance sheet = $27,000,000. The total amount of liabilities in Charger company's balance sheet = $15,000,000. The total amount of equity in Charger company's balance sheet = $12,000,000

The formula of debt to equity ratio is = Debt divided by equity

Putting the figures in the formula:

Debt to equity = $15,000,000 divided by $12,000,000

                         = 1.25

Therefore, the correct answer is 1.25