Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

14. Financial Statement Analysis

Ratios: Debt to Equity Ratio

Financial Accounting

14. Financial Statement Analysis

Ratios: Debt to Equity Ratio

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Multiple Choice

If Chester Company has total liabilities of \$300,000 and total equity of \$150,000, what is its debt to equity ratio?

2.0

1.5

0.33

0.5

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Verified step by step guidance

Understand the concept: The debt-to-equity ratio is a financial metric that compares a company's total liabilities to its total equity. It is calculated using the formula: Debt-to-Equity Ratio = Total Liabilities / Total Equity.

Identify the given values: From the problem, Chester Company has total liabilities of $300,000 and total equity of $150,000.

Substitute the values into the formula: Using the formula, Debt-to-Equity Ratio = Total Liabilities / Total Equity, substitute $300,000 for Total Liabilities and $150,000 for Total Equity.

Perform the division operation: Divide the total liabilities ($300,000) by the total equity ($150,000) to calculate the ratio.

Interpret the result: The resulting value represents the debt-to-equity ratio, which indicates how much debt Chester Company has relative to its equity.