Question

At the end of the current year, the following information is available for both Pulaski Company and Scott Company. Pulaski Company Scott Company Total assets $ 860,000 $ 440,000 Total liabilities 360,000 240,000 Total equity 500,000 200,000 Required: 1. Compute the debt-to-equity ratios for both companies

Answer 1

Answer:

ratio =  1.2 : 1

Explanation:

given data

                  Pulaski company scott company  

Total assets     860,000          440,000  

total liabilities     360,000          240,000  

total equity     500,000           200,000

to find out

Compute the debt-to-equity ratios for both companies

solution

we get here debt-equity ratio that is express as

debt-equity ratio = $\frac{Debt}{equity}$    

here we get

Pulaski company =  $\frac{total\ liabilities}{equity}$    

Pulaski company =  $\frac{360000}{500000}$    

ratio are =  1.2 : 1