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Ernst Company’s balance sheet shows total liabilities of $32,836,300, total stockholders’ equity of $11,675,000, and total assets of $44,511,300.
Required:
1. Calculate the debt ratio. Round the percentage to two decimal places.
%
2. Calculate the debt-to-equity ratio. Round to two decimal places.
Expert Answer
Total Liabilities = $32,836,300
Total Stockholders’ Equity = $11,675,000
Total Assets = $44,511,300
Answer 1.
Debt Ratio = Total Liabilities / Total Assets
Debt Ratio = $32,836,300 / $44,511,300
Debt Ratio = 0.7377
Debt Ratio = 73.77%
Answer 2.
Debt-to-equity Ratio = Total Stockholders’ Equity / Total Assets
Debt-to-equity Ratio = $11,675,000 / $44,511,300
Debt-to-equity Ratio = 0.2623
Debt-to-equity Ratio = 26.23%
