1 Fincher Inc has a total debt ratio of 54 What is its debte

1. Fincher, Inc, has a total debt ratio of 54 What is its debt-equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g, 32.16. Debt-equity ratio What is its equity multiplier? (Do not round intermediate calculations and round your answer to 2 decimal places,e.g 32.16.) Equity multipliertimes times

Solution

1) Debt-equity ratio           1.17 Working: Total debt ratio 0.54 Debt ratio = Debt/Total Assets 0.54 = Debt/ 1 Debt = 0.54 When Debt = 0.54 Equity = Total Assets - Total Debt =           1.00 - 0.54 =           0.46 Now, Debt- Equity ratio = Debt/ Equity = 0.54 /           0.46 =           1.17 2) Equity Multiplier           2.17 Working: Equity Multiplier = Total Assets / Equity = 1 /           0.46 =           2.17