Asked by Santiago alzate on Jun 29, 2024
Verified
Karma Corporation has total assets of $190,000 and total liabilities of $90,000. The corporation's debt-to-equity ratio is closest to:
A) 0.47
B) 0.90
C) 0.53
D) 0.32
Debt-to-Equity Ratio
A measurement indicating the relative proportions of a company's total liabilities to shareholders' equity.
Total Liabilities
The combined amount of all financial obligations a company owes to outside parties, including loans, accounts payable, mortgages, and other debts.
Total Assets
The sum of all resources owned by an entity that have economic value and can be measured and expressed in monetary terms.
- Scrutinize diverse financial ratios, like total asset turnover, the debt-to-equity ratio, and equity multiplier.
Verified Answer
Total Equity = Total Assets - Total Liabilities
Total Equity = $190,000 - $90,000 = $100,000
Debt-to-Equity Ratio = $90,000/$100,000 = 0.9
Learning Objectives
- Scrutinize diverse financial ratios, like total asset turnover, the debt-to-equity ratio, and equity multiplier.
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