Question

Linton Company has the following financial statement information: Current assets $20,000; Noncurrent assets $80,000; Current liabilities $20,000; Noncurrent liabilities $60,000; and Stockholders' equity $20,000. What is the debt to equity r

Answer 1

The debt to equity ratio of Linton Company is 0.25.

What is a debt to equity ratio?

This is a financial ratio that indicates the relative proportion of shareholders' equity and debt used to finance a company's assets.

Debt to equity ratio = Stockholders' equity /  (Current liabilities + Noncurrent liabilities)

Debt to equity ratio = $20,000 / ($20,000 + $60,000)

Debt to equity ratio = $20,000 / $80,000

Debt to equity ratio = 0.25

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