Maddenmobile317 Maddenmobile317
  • 02-06-2021
  • Business
contestada

SME Company has a debt-equity ratio of .60. Return on assets is 7.9 percent, and total equity is $510,000. a. What is the equity multiplier

Respuesta :

ayokenny2001
ayokenny2001 ayokenny2001
  • 03-06-2021

Answer:

1.60

Explanation:

Given the above information, equity multiplier is computed as shown below.

Equity multiplier = 1 + Debt - equity ratio

Where,

Debt - equity ratio = 0.60

Therefore,

Equity multiplier = 1 + 0.60

Equity multiplier = 1.60

Hence, equity multiplier is 1.60

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