Breckenridge Ski Company has total assets of $590,618,083 and a debt ratio of 36.46 percent. Calculate the company’s debt-to-equity ratio and equity multiplier
To calculate the debt-to-equity ratio and equity multiplier, we need to know the debt and equity values of the company.
Given information:
Total assets = $590,618,083
Debt ratio = 36.46%
First, we need to find the debt and equity values.
Debt = Total assets * Debt ratio
Debt = $590,618,083 * 0.3646
Debt = $215,277,915.3498 (approximately $215,277,915)
Equity = Total assets - Debt
Equity = $590,618,083 - $215,277,915
Equity = $375,340,168 (approximately $375,340,168)
Now that we have the debt and equity values, we can calculate the debt-to-equity ratio and equity multiplier.
Debt-to-equity ratio = Debt / Equity
Debt-to-equity ratio = $215,277,915 / $375,340,168
Debt-to-equity ratio = 0.5733 (approximately 0.57)
Equity multiplier = Total assets / Equity
Equity multiplier = $590,618,083 / $375,340,168
Equity multiplier = 1.5726 (approximately 1.57)
Therefore, the company's debt-to-equity ratio is approximately 0.57, and the equity multiplier is approximately 1.57.