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

9. Current Liabilities

Types of Liabilities

Financial Accounting

9. Current Liabilities

Types of Liabilities

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Multiple Choice

Which financial ratio is calculated by dividing a company's total debt by its total equity?

Debt-to-Equity Ratio

Quick Ratio

Current Ratio

Interest Coverage Ratio

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Verified step by step guidance

Step 1: Understand the concept of the Debt-to-Equity Ratio. It is a financial ratio that measures the proportion of a company's total debt to its total equity, indicating the company's financial leverage.

Step 2: Recall the formula for the Debt-to-Equity Ratio: \( \text{Debt-to-Equity Ratio} = \frac{\text{Total Debt}}{\text{Total Equity}} \). This formula divides the total liabilities (debt) by the shareholders' equity.

Step 3: Compare the given options. The Quick Ratio, Current Ratio, and Interest Coverage Ratio are different financial metrics used for liquidity and solvency analysis, but they do not involve dividing total debt by total equity.

Step 4: Identify that the correct answer is the Debt-to-Equity Ratio, as it directly matches the description provided in the problem.

Step 5: To calculate the Debt-to-Equity Ratio in practice, gather the company's total debt and total equity from its balance sheet, then apply the formula \( \text{Debt-to-Equity Ratio} = \frac{\text{Total Debt}}{\text{Total Equity}} \).