connect. BADM 363 Business Financ SECTIONS e: Fall 2017 (ALL Chapter 3 Homework
ID: 2784008 • Letter: C
Question
connect. BADM 363 Business Financ SECTIONS e: Fall 2017 (ALL Chapter 3 Homework nsta Question 3 (of 16) 3· valuc 1000 points Problem 3-5 Calculating Leverage Ratios [LO 2] Fincher, Inc., has a total debt ratio of.10 What is its debt-equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g, 3216.) Dett-equity ratio tmes What is its equity multiplier? (Do not round intermediate calculations and round your answer to 2 decimal places,e.g,32.16.) Equity multiplier times Worksheet Difficulty: 1 Basic Section 32 Rat Problem 3-5 Calculating Ratios [LO 2 Leverage Leaming Objective: 03-02 Cormpute and, more important, interpret some common ratiosExplanation / Answer
total debt ratio=Total debt/Total assets
Total debt=0.1Total assets
Total assets=Debt+Equity
Hence Total equity=(1-0.1)=0.9Total assets
Debt-equity ratio=Debt/equity
=(0.1Total assets/0.9Total assets)=0.11 times(Approx)
Equity multiplier=Total assets/Equity
=Total assets/0.9Total assets=1.11 times(Approx)
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