Queen, Inc., has a total debt ratio of .30.

a. What is its debt-equity ratio?

b. What is its equity multiplier?

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Expert Solution

Total Debt Ratio = 0.30

Debt/Assets = 0.30

Assets/Debt = 1/0.30

Assets/Debt - 1 = 1/0.30 - 1

Equity/Debt = 2.33

Debt/Equity = 1/2.33 = 0.43

Equity Multiplier = Assets/Equity = Debt/Equity + 1

Equity Multiplier = 1 + 0.43 = 1.43

jeff jeffy answered 2 years ago

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