which of the following is not an impact of the slowdown occurring in China’s eco

Question

which of the following is not an impact of the slowdown occurring in China’s economy? which of the following is not an impact of the slowdown occurring in China’s economy? which of the following is not an impact of the slowdown occurring in China’s economy? which of the following is not an impact of the slowdown occurring in China’s economy? You are considering a stock investment in one of two firms (LotsofDebt, Inc and LotsofEquity, Inc), both of which operate in the same industry. LotsofDebt, Inc. finances its $100 million in assets with $90 million in debt and $10 million in equity. LotsofEquity, Inc. finances its $100 million in assets with $10 million in debt and $90 million in equity. What are the debt ratio, equity multiplier, and debt-to-equity ratio for the two firms? Multiple Choice LotsofDebt: 90 percent, 111 times, 0.1111 times, respectively and LotsofEquity 10 percent. 10 times, 9 times, respectively LotsofDebt: 90 percent, 10 times, 9 times, respectively; and LotsofEquity 10 percent 11times, 011 times, respectively LotsofDebt 10 percent, 11 times, Om mes,respectively, and LotsofEquity 90 percent, 10 tmes, 9 times, respectively

Explanation / Answer

Answer: Option 2

LotsofDebt: 90%, 10 Times, 9 Times, respectively; and LotsofEquity: 10%, 1.11 Times, 0.1111 Times

LotsfDebt:

Debt ratio = (Total Debt / Total Assets)*100 = (90million/100Million)*100 = 90%

Equity Multiplier = (Total Assets / Total Equity) = (100 / 10) = 10 Times

Debt to equity Ratio = (Total Liabilities / Total shareholder's equity) = (90 / 10) = 9 Times

LotsofEquity:

Debt ratio = (Total Debt / Total Assets)*100 = (10million/100Million)*100 = 10%

Equity Multiplier = (Total Assets / Total Equity) = (100 / 90) = 1.11 Times

Debt to equity Ratio = (Total Liabilities / Total shareholder's equity) = (10 / 90) = 0.1111 Times

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