In: Finance
Tiggie's Dog Toys, Inc., reported a debt-to-equity ratio of 1.25 times at the end of 2015. The firm's total assets at year-end were $27.90 million.
How much of their assets are financed with debt and how much with equity? (Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 2 decimal places.) |
Debt + Equity = Total Assets |
Debt to Equity ratio =Debt / Equity = 1.25 |
Assume total Equity = X |
than total Debt = 1.25 X |
Total Value of the Debt and Equity = X + 1.25 X = $ 27.90 Million |
Total Value of the Debt and Equity = 2.25 X = $ 27.90 Million |
= 2.25 X = $ 27.90 Million |
X = $ 27.90 / 2.25 |
X = $ 12.40 |
So, Equity = $ 12.40 |
And Debt = $ 12.40 X 1.25 = $ 15.50 |
Total = $ 12.40 + $ 15.50 =$ 27.90 |