Question

Argent Corporation has $60 million in current liabilities, $150 million in total liabilities, and $210 million in total common equity; Argent has no preferred stock. Argent’s total debt is $120 million. What is the debt-to-assets ratio? What is the debt-to-equity ratio?

Answer 1

Answer and Explanation:

The computation is shown below

Debt to asset ratio is

= Total debt ÷ total asset

= $120 million ÷ ($150 million + $210 million)

= $120 million ÷ $360 million

= 0.33

And, the debt to equity ratio is

= Total debt ÷ total equity

= $120 million ÷ $210 million

= 0.57

We simply applied the above formula so that the correct value could come

And, the same is to be considered