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The Simone Company has net income of $146,650
The Simone Company has net income of $146,650. Total assets are $975,000 and the return on equity is 20%. What is Simone's debt-equity ratio?
Expert Solution
Computation of the debt-equity ratio:-
Return on equity = Net income / Equity
20% = $146,650 / Equity
Equity = $146,650 / 20%
= $733,250
Debt = Total assets - Equity
= $975,000 - $733,250
= $241,750
Debt-equity ratio = Debt / Equity
= $241,750 / $733,250
= 0.33
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