Practice Debt-to-Equity Ratio Formula - 19.2.2.a | 19. Financial Statement Analysis – Ratio Analysis | Management 1 (Organizational Behaviour/Finance & Accounting)
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19.2.2.a - Debt-to-Equity Ratio Formula

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Learning

Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is the Debt-to-Equity Ratio if a company has total debt of $200,000 and shareholders' equity of $400,000?

💡 Hint: Use the formula D/E = Total Debt ÷ Shareholders' Equity.

Question 2

Easy

True or False: A higher Debt-to-Equity Ratio indicates that a company is less risky.

💡 Hint: Think about how debt impacts financial stability.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What does the Debt-to-Equity Ratio indicate?

  • The total profit of a company
  • The company's market share
  • The proportion of debt relative to equity

💡 Hint: Consider how debt and equity relate to financing.

Question 2

True or False: A low Debt-to-Equity Ratio is always bad.

  • True
  • False

💡 Hint: Reflect on financial risk and stability factors.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A startup has a Debt-to-Equity ratio of 3. Describe potential challenges they may face if they continue this path without changes.

💡 Hint: Consider what high debt could mean for cash flow and investor relations.

Question 2

Given two companies, one with a D/E of 1.2 and the other 0.8, discuss which one might be more attractive to a conservative investor and why.

💡 Hint: Think about how risk influences investment decisions.

Challenge and get performance evaluation