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Computing the debt to equity ratio

 

Question: Computing the debt to equity ratio

Jackson Corporation has the following amounts as of December 31, 2018.

Total assets $ 55,250

Total liabilities 22,750

Total equity 32,500

Compute the debt to equity ratio on December 31, 2018.

Solutions

Expert Solution

 

Step 1: Definition of debt-to-equity ratio

The relationship between total liabilities and total equity is called the debt-to-equity ratio.

Step 2: Calculation of the debt-to-equity ratio

The company’s debt-to-equity ratio is calculated by dividing total liabilities by total equity. The debt to equity ratio shows the relationship betweent the debt and equity.

 

The debt-to-equity ratio is 0.70

Sahil Dangi answered 1 year ago
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