Solvency Ratio: Calculate of Debt-to-Equity Ration LO5 Canopy Corporation rents

Question

Solvency Ratio: Calculate of Debt-to-Equity Ration LO5 Canopy Corporation rents out tents for large parties thrown for such things as graduations, weddings, and birthdays. part of Canopy's financial statements for last year is as follows: Account payable $45,000.00 Payroll payable $5,000.00 Taxes payable $10,000.00 Total current liabilities $60,000.00 Notes payable $20,000.00 Total liabilities $80,000.00 Capital Stock $250,000.00 Retained earnings $100,00.00 Total stockholders' equity $350,000.00 Total liabilities and stockholders' equity $430,000.00. What is Canopy Corporation's debt-to-equity ratio?

Explanation / Answer

Debt equity ratio = Total liability / Share holder equity

= $80000 / $350000

=0.23

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