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Queen, inc., has a total debt ratio of .32.
a. What is its debt-equity ratio? (do not round intermediate calculations. Round your answer to 2 decimal places,
e.G., 32.16.)
b. What is its equity multiplier? (do not round intermediate calculations. Round your answer to 2 decimal places,
e.G., 32.16.)

Respuesta :

(A) Debt ratio = 0.32

Debt/(debt + equity)= 0.32

Debt = 0.32 *Debt + 0.32 *Equity

0.68* Debt = 0.32* Equity

Debt = 0.32*Equity/0.68 = 0.32/0.68 * Equity

Debt /equity ratio = (0.32/068*Equity)/Equity

Debt/Equity ratio = 0.32/0.68 = 0.47

Debt-equity ratio = 0.47 (Rounded to 2 decimals)

(B) Equity multiplier = 1 + debt -equity = 1+0.47 = 1.47

Equity multiplier = 1.47 (Rounded to 2 decimals)

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