Debt Management Ratios
You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $34.00 million in assets with $31.00 million in debt and $3.00 million in equity. LotsofEquity, Inc. finances its $34.00 million in assets with $3.00 million in debt and $31.00 million in equity.
Calculate the debt ratio. (Round your answers to 2 decimal places.)
Debt ratio Lots of Debt % Lots of Equity %
Calculate the equity multiplier. (Round your answers to 2 decimal places.)
Equity multiplier Lots of Debt times Lots of Equity times
Calculate the debt-to-equity. (Round your answers to 2 decimal places.)
Debt-to-equity Lots of Debt times Lots of Equity times