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Sagot :
firm's debt-equity ratio = 0.16
What is meant by debt-equity ratio?
The debt-equity ratio is a term used in accounting to define a company's financial structure. By directly dividing a company's total debt by its total equity, this ratio is calculated.
Financial ratios are statistics derived from financial statements of an organization that analysts may use to evaluate business performance and benchmark against other businesses in the same industry.
The primary categories into which the financial ratios may be subdivided are liquidity ratios, solvency ratios, profitability ratios, and market outlook ratios. Each class will focus on a distinct element of the business.
Analysts should, however, assess the accuracy and transparency of the supplied financial figures before beginning their research. Some internal investors may alter the financial figures in order to benefit themselves.
ROE = profit margin × asset turnover × equity multiplier
18.62% = 10.70% × 1.50 × equity multiplier
equity multiplier = 1.16
Then debt-equity ratio is calculated as:
debt-equity ratio = equity multiplier - 1
debt-equity ratio = 1.16 - 1
debt-equity ratio = 0.16
To learn more about debt-equity ratio from given link
https://brainly.com/question/27996292
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