You are considering a stock investment in one of two firms (LotsofDebt, Inc. and
ID: 2445138 • Letter: Y
Question
You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $34.75 million in assets with $32.50 million in debt and $2.25 million in equity. LotsofEquity, Inc. finances its $34.75 million in assets with $2.25 million in debt and $32.50 million in equity.
Calculate the debt ratio. (Round your answers to 2 decimal places.)
Debt ratio
Lots of Debt %
Lots of Equity %
Calculate the equity multiplier. (Round your answers to 2 decimal places.)
Equity multiplier
Lots of Debt times
Lots of Equity times
Calculate the debt-to-equity. (Round your answers to 2 decimal places.)
Debt-to-equity
Lots of Debt times
Lots of Equity times
Explanation / Answer
Debt ratio = Total assets/ total assets
Equity multiplier = total assets / total stockholders equity
debt to equity = debt to equity
lots of debt $32.5/34.75 93.52% lots of equity $2.25/$34.75 6.47%Related Questions
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