Series 79 practice questioneasyLeverage Ratios
A company has $500 million in debt and $250 million in equity. What is its debt-to-equity ratio?
- A0.5x
- B1.0x
- C2.0x✓ Correct answer
- D3.0x
Explanation
Why C — 2.0x
Debt-to-equity = $500M / $250M = 2.0x. A is if you reverse numerator and denominator, and D is an overestimate.
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