Question

In: Finance

Gutweed, Inc. has total equity of $133,000 and total assets of$225,000. What is the debt-equity...

Gutweed, Inc. has total equity of $133,000 and total assets of $225,000. What is the debt-equity ratio?



0.97



0.82



0.69



0.76

Fennel, Inc. has inventory of $2,200, current liabilities of $3,100, cash of $1,900, and accounts receivable of $3,900. What is the cash ratio?



0.45



0.61



0.72



0.53

Solutions

Expert Solution

Question 1)

Debt equity = debt/equity

given equity is 133000

Total assets is 225000

Debt = Total assets - equity

= (225000-133000)/133000 = 0.69

Question 2)

Cash ratio is = Cash and cash equivalents /current liabilties

= 1900/3100 = 0.61


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