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

1. Introduction to Accounting

Fundamental Accounting Equation

Financial Accounting

1. Introduction to Accounting

Fundamental Accounting Equation

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Multiple Choice

When dividing its total debt by its total equity, what is a company trying to measure?

Asset Turnover Ratio

Return on Equity

Debt-to-Equity Ratio

Current Ratio

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Verified step by step guidance

Step 1: Understand the concept of the Debt-to-Equity Ratio. This ratio measures the proportion of a company's financing that comes from debt versus equity. It is calculated as Total Debt divided by Total Equity.

Step 2: Recognize that the Debt-to-Equity Ratio is a key indicator of financial leverage. It helps assess how much risk a company is taking by using debt to finance its operations compared to equity.

Step 3: Compare the Debt-to-Equity Ratio to other financial metrics mentioned in the problem, such as Asset Turnover Ratio, Return on Equity, and Current Ratio. Each of these measures different aspects of a company's financial health and performance.

Step 4: Note that dividing Total Debt by Total Equity specifically aligns with the formula for the Debt-to-Equity Ratio, making it the correct answer in this context.

Step 5: Apply this understanding to analyze a company's financial statements. Look for the Total Debt and Total Equity values in the balance sheet to calculate the Debt-to-Equity Ratio and interpret the company's financial leverage.