Question

Allyba Dance Supply has total assets of $550,000 and total debt of $295,000. What is the equity multiplier?

a. 46
b. 1.0
c. 1.075
d. 1.86

Answer 1

Answer:

Equity multiplier = 2.16

Explanation:

Given:

Total assets = $550,000

Total debt = $295,000

Find:

Equity multiplier

Computation:

Equity multiplier = Total assets / [Total assets - Total debt]

Equity multiplier = $550,000 / ($550,000 – 295,000)

Equity multiplier = 2.16