CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Use the following data from Delta's common size financial statement to answer the question.

Earnings after taxes = 18%
Equity = 40%
Current assets = 60%
Current liabilities = 30%
Sales = $300
Total assets = $1,400

What is Delta's total-debt-to-equity ratio?
A. 2.5
B. 1.5
C. 1.0
Explanation: If equity = 40%, debt must = 60%, thus 60/40 = 1.5.

User Contributed Comments 3

User Comment
humphrey D-E ratio is long term debt over equity, total liability is 60% of asset, current liability 30%, shouldn't D-E ratio be (60%-30%)/40% = .75?
maflu humphrey: it asks total-debt-to-equity, not debt-to-equity ratio!
Inaganti6 I like how they give you so much extraneous data, just so they can mess with your head. They really, really, really don't want you to pass this exam.
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