Problem
Joy's Company's most recent balance sheet reported total assets of $250,000 and total liabilities of $145,000. Therefore, Joy's debt to total assets ratio as of the date of the balance sheet was:
Debt to total assets = total liabilities / total assets
Debt to total assets = $145,000 / $250,000
Debt to total assets = 0.58 or 58% (or 0.58 to 1 or 0.58:1)
Whether 58% is a good ratio of debt to total assets depends on future conditions.
Based on the information given, what is debt to equity ratio? How would you calculate it for Joy's company? Explain or show how you got your answer.