CVD, Inc. has a debt ratio of 50%, and an equity multiplier of 2. What is CVD's stockholders' equity if total debt is $100,000?

A) $100,000
B) $150,000
C) $200,000
D) $50,000

The equity multiplier is defined as total assets divided by total equity. Given an equity multiplier of 2, this means total assets are twice the amount of stockholders' equity. With a debt ratio of 50%, half of the company's assets are financed through debt. If total debt is $100,000, representing 50% of total assets, then total assets are also $200,000. Since the equity multiplier is 2, stockholders' equity, which is half of total assets, is $100,000.