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mary's bakery has sales of $213,600, total assets of $198,700, total debt ratio 0.6, and a...

mary's bakery has sales of $213,600, total assets of $198,700, total debt ratio 0.6, and a profit margin of 2.4 percent. what is the equity multiplier?

Solutions

Expert Solution

Liabilities = Assets * Debt Ratio = $198,700 * 0.6 = $119,220

Equity = Total assets - Liabilities = $198,700 - $119,220 = $79,480

Equity multiplier= Total assets / Equity = $198,700 / $79,480 = 2.5


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