ease SHOW YOUR FULL CALCULATION FOR EVERY QUESTION1s ough Corporation\'s total a

Question

ease SHOW YOUR FULL CALCULATION FOR EVERY QUESTION1s ough Corporation's total assets at the end of Year 2 were $1,247,000 and at the end of Y ear were $1,270,000, The company's total liabilities at the end of Year 2 were $512,000 and at the end of Year 1 were $550,000. The company's total stockholders equity at the end of Year 2 was $735,000 and at the end of Year 1 was $720,000. The company's equity maltiplier closest to: a. 1.73 b. 1.44 c. 0.69 d. 0.58 ip: First, find average total assets Second, find average stockholders' equity Third find Equity multiplier

Explanation / Answer

A. 1.73

Equity multiplier = Average total assets* ÷ Average stockholders' equity**

= $1,258,500 ÷ $727,500 = 1.73 (rounded)

*Average total assets = ($1,247,000 + $1,270,000) ÷ 2 = $1,258,500

**Average stockholders' equity = ($735,000 + $720,000) ÷ 2 = $727,500

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