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Orrick Company reported total assets of $4,200,000, total liabilities of $700,000, and total equity of $3,500,000 at the end of the year and total sales of $15,000,000 during the year. The company's debt-to-equity ratio (stated in a percentage rounded to one decimal point) is _____. 0.2% 0.5% 2.0% 20.0%

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Answer:

The correct option is 20.0%

Explanation:

debt to equity ratio considers the total liabilities of a company as percentage of its equity stockholders' value.

Total liabilities in this case is $700,000 compared to total equity of $3,500,000.

company's debt-to-equity ratio=$700,000/$3,500,000=20.0%

The debt-to-equity ratio should not be confused with debt-to-assets ratio,which has a different formula altogether.

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