A company has a total debt ratio of 0.30. In addition, the company had additions to retained earnings for the year just ended of $500,000, the firm paid out $300,000 in cash dividends, and it has an ending total equity of $5 million. What is its debt-equity ratio?

A company has a total debt ratio of 0.30. In addition, the company had additions to retained earnings for the year just ended of $500,000, the firm paid out $300,000 in cash dividends, and it has an ending total equity of $5 million. What is its debt-equity ratio?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 4TP: You are considering two possible companies for investment purposes. The following data is available...

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Question

Please explain the correct approach for solving this financial accounting question.

A company has a total debt ratio of 0.30. In
addition, the company had additions to
retained earnings for the year just ended of
$500,000, the firm paid out $300,000 in cash
dividends, and it has an ending total equity
of $5 million.
What is its debt-equity ratio?

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