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

Computing the debt to equity ratio

Ludwig Corporation has the following data as of December 31, 2018:

Total Current Liabilities $ 36,210 Total Stockholders’ Equity $ ?

Total Current Assets 58,200 Other Assets 36,800

Long-term Liabilities 139,630 Property, Plant, and Equipment, Net 206,440

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

Expert Solution

Step 1: Definition of debt-to-equity ratio

The debt-to-equity ratio is a financial ratio that shows the proportion of debt and the shareholder’s equity.

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

Working Notes:

Total Current Assets	$58,200
Other Assets	$36,800
Plant and Equipment	$206,440
Total Assets	$301,440
Less: Current Liabilities	($36,210)
Less: Long-term Liabilities	($139,630)

Total Shareholder’s Equity		$134,600

The debt-to-equity ratio of the company is 1.46

Sahil Dangi answered 2 years ago

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