The debtequity ratio is twice as much as the total debt rati

The debt-equity ratio is twice as much as the total debt ratio. 1) What is the total debt ratio? 2) What is the debt-equity ratio? 3) What is the equity multiplier? Please show all steps.

Solution

Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Debt Equity Ratio = 2*Debt Ratio Debt/Equity = 2*Debt/Assets Assets = 2 * Equity Debt = Assets - Equity Debt = 2equity - equity Debt = Equity Debt Ratio = Debt/Assets = Equity/2Equity = 1/2 =.50 Debt Equity ratio = Debt / Equity = 1:1 since debt and equity are equal Equity Multiplier = Assets/Equity = 2Equity / Equity = 2:1