Question

When using the book value of equity, the debt to equity ratio for Luther in 2018 is closest to: A) 0.43 B) 2.29 C) 2.98 D) 3.57

Answer 1

Answer:

The correct answer is 2.29

Explanation:

The debt-to-capital ratio (D/E) is a measurement of a company's financial leverage.

D/E=Total debt/Total equity

Total debt=(notes payable (10.5) + current maturities of long-term debt (39.9) + long-term debt (239.7) = 290.1

Total Equity = 126.6

D/E= 290.1/126.6=2.29

Thus, the debt to equity ratio for Luther in 2018 is closest to 2.29