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-   -   What is the Debt to Equity Ratio? (https://www.askmehelpdesk.com/showthread.php?t=454752)

  • Mar 5, 2010, 02:23 PM
    leonardjustin
    What is the Debt to Equity Ratio?
    Profit Margin is 9.2%



    Return on Equity is 18.67



    Asset Turnover Ratio is 1.63



    What is the Debt to Equity Ratio?
  • Mar 5, 2010, 02:34 PM
    leonardjustin
    Debt to Equity ratio
    Profit Margin is 9.2%



    Return on Equity is 18.67



    Asset Turnover Ratio is 1.63



    What is the Debt to Equity Ratio?
  • Mar 6, 2010, 06:23 AM
    ArcSine
    Let's let N, S, A, and E denote, respectively, Net income, Sales, Assets, and Equity (very creative, no?).

    Your first two metrics lead to

    N = 0.092S and N = 0.1867E

    and so 0.092S = 0.1867E

    Your third ratio tells you that S = 1.63A. By subbing in this expression for S into the equality above, you have

    (0.092)(1.63)A = 0.1867E

    Now I'll turn the controls over to you, LJ, and let you finish the landing.
  • Mar 6, 2010, 07:11 AM
    leonardjustin
    d/e = 25 (rounded)?
  • Mar 6, 2010, 02:52 PM
    ArcSine
    OK, a bit more guidance...

    You're going to use that last equation I left you with to determine what percentage of Assets the Equity represents. That will then tell you what percentage of Assets the Debt represents. You'll then have all you need to figure the d/e.

    To illustrate, suppose you know that Equity is 2/3 of Assets. That means that Debt must be 1/3 of assets, natch. From that, it immediately follows that Equity is twice the amount of Debt, or that d/e = 0.50.

    Back to you, amigo.

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