If one knows asset turnover, debt to equity ratio, and sales, what is the formula to calculate total debt?
Sales = $4,500,000
Asset Turnover = 5X's
Debt to equity = 60%
What is the total debt?
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If one knows asset turnover, debt to equity ratio, and sales, what is the formula to calculate total debt?
Sales = $4,500,000
Asset Turnover = 5X's
Debt to equity = 60%
What is the total debt?
Asset turnover = Sales/Total assets = 4,500,000/a = 5x. This would yield a = 900,000.
Since assets = liabilities and equity, you would have 900,000=60%eq + eq.
Now all you have to do is solve for eq.
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