Series 79 practice questioneasyLeverage Ratios
Which of the following best describes the debt-to-equity ratio?
- ATotal equity divided by total debt
- BTotal debt divided by total equity✓ Correct answer
- CNet income divided by total equity
- DEBIT divided by interest expense
Explanation
Why B — Total debt divided by total equity
The debt-to-equity ratio is calculated as total debt divided by total equity. Answer A reverses the calculation. C describes return on equity, and D is the interest coverage ratio.
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