Boyd Inc has a total debt ratio of 068 Requirement 1 What is

Boyd, Inc.. has a total debt ratio of 0.68. Requirement 1: What is its debt-equity ratio? times O 0.78 times 0.22 times 1.22 times 0.68 times Requirement 2: What is its equity multiplier? -0.13 times times 1.68 times 1.32 times times

Solution

1. 2.13 times

Explanation:

Debt Equity Ratio = Total Liabilities / Total Equity                               (Eq. 1)

Debt Ratio = Total Liabilities / Total Assets (Eq. 2)

From Eq. 1 and Eq. 2, we can derive:
Debt Ratio = Debt Equity Ratio / (1+Debt Equity Ratio)                         (Eq. 3)

So, 0.68 = DER/ (1 + DER)

      0.68((1 + DER) = DER

     0.68 + 0.68 DER = DER

      DER - 0.68DER = 0.68

      0.32DER = 0.68

      DER = 0.68/0.32 = 2.13

2. 3.13 times

   Explanation:

   Equity Multiplier = 1 / Equity ratio = 1/0.32 = 3.13