Question
Trina Corp has total assets of \( \$ 131,000 \). If total equity are \( \$ 76,700 \), find the debt-to-equity ratio. (Round to the nearest hundredth.) Select one: a. \( .41: 1 \) b. \( 1.71: 1 \) c. \( .71: 1 \) d. \( 1.41: 1 \)
Ask by Schneider John. in the United States
Mar 21,2025
Upstudy AI Solution
Tutor-Verified Answer
Answer
The debt-to-equity ratio is 0.71:1.
Solution
**Step 1: Calculate Total Debt**
The total debt is given by the difference between total assets and total equity.
\[
\text{Debt} = \text{Total Assets} - \text{Total Equity} = 131\,000 - 76\,700 = 54\,300
\]
**Step 2: Calculate Debt-to-Equity Ratio**
The debt-to-equity ratio is calculated by dividing total debt by total equity.
\[
\text{Debt-to-Equity Ratio} = \frac{\text{Debt}}{\text{Equity}} = \frac{54\,300}{76\,700} \approx 0.71
\]
**Answer:**
\(0.71: 1\)
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Simplify this solution Beyond the Answer
To find the debt-to-equity ratio, you first need to calculate total liabilities. Total liabilities are calculated by subtracting total equity from total assets: \[ \text{Total Liabilities} = \text{Total Assets} - \text{Total Equity} = \$ 131,000 - \$ 76,700 = \$ 54,300 \] Now, the debt-to-equity ratio is calculated by dividing total liabilities by total equity: \[ \text{Debt-to-Equity Ratio} = \frac{\text{Total Liabilities}}{\text{Total Equity}} = \frac{54,300}{76,700} \approx 0.71 \] When rounded to the nearest hundredth, the debt-to-equity ratio is \( 0.71: 1 \). Therefore, the correct answer is: c. \( .71: 1 \)
