Tiggie\'s Dog Toys, Inc., reported a debt-to-equity ratio of 1.25 times at the e
ID: 2614259 • Letter: T
Question
Tiggie's Dog Toys, Inc., reported a debt-to-equity ratio of 1.25 times at the end of 2015. The firm's total assets at year-end were $27.90 million.
How much of their assets are financed with debt and how much with equity? (Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 2 decimal places.)
How much of their assets are financed with debt and how much with equity? (Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 2 decimal places.)
Explanation / Answer
Debt + Equity = Total Assets Debt to Equity ratio =Debt / Equity = 1.25 Assume total Equity = X than total Debt = 1.25 X Total Value of the Debt and Equity = X + 1.25 X = $ 27.90 Million Total Value of the Debt and Equity = 2.25 X = $ 27.90 Million = 2.25 X = $ 27.90 Million X = $ 27.90 / 2.25 X = $ 12.40 So, Equity = $ 12.40 And Debt = $ 12.40 X 1.25 = $ 15.50 Total = $ 12.40 + $ 15.50 =$ 27.90