Chapter 10, Problem 90.2C

To determine

Concept introduction:

Morals are judgments, standards, and rules of good conduct in the society. They guide people toward permissible behavior with regard to basic values. Business ethics are business policies and practices which are made to conduct a business in an ethical and moral way. Ethics can be found it laws but some are developed with the situations and moral and acceptable social behaviors.

Debt to Equity Ratio:

Debt to equity ratio is calculated to determine the leverage position of the company. It compares the total liabilities of the company with it total shareholders’ equity. The debt to equity ratio is calculated by dividing the Total Liabilities by Total Stockholder’s Equity. The formula to calculate Debt to equity ratio is as follows:

$\text{Debt to equity ratio = }\frac{\text{Total liabilities}}{\text{Total Stockholder’s Equity}}$

To indicate:

The action of the manager for change in the Debt to equity ratio.