a firm has a debt-equity ratio of 1.46.What is the total debt ratio? 0.59 0.46 0.77...

a firm has a debt-equity ratio of 1.46.What is the total debt ratio?

0.59

0.46

0.77

0.68

Expert Solution

Solution

The firm has a debt-equity ratio of 1.46

Formula of Debt Equity ration is Total Debt/Total Equity

It implies if total debt is $146, then total equity is $100

So total assets must be $246.(Because Total assets= Total Debt+Total Equity)

So Total Debt ratio= Total Debt/Total Assets

= $146/$246

=0.59

So Option A is the correct answer

jeff jeffy answered 2 years ago

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