Asset (A) = Debt (D)+ Equity (E)
Given, D/A = 0.3
or A/D = 10/3
or A/D - 1 = 10/3 - 1
or (A - D)/D = 7/3
i.e. E/D = 7/3
D/E = 3/7=0.43 =43%
Assets = liabilities plus equity. If debt is 30% of assets, then it's 30% of liabilities plus equity, so the ratio would be 30/70.
That assumes the question is equating debt to total liabilities
First you have to determine what % of the assets is attributable to equity. For this you must subtract liabilities from the assets. The balance sheet shows Assets = debt + equity
Debt to equity is expressed as Total Liabilities/ Shareholders Equity.
Debt to assets equals total liabilities/ total assets.
..basic accounting equation: Liabilities + Equity = Assets
Assuming Debt represents all Liabilities...
Since: Debt "D" + Equity "E" = Assets "A" Assets,
then Assets represents total (100%) Capital "C"
...so A = C
if Debt is 30% of capital, then Equity is 70% of capital...
D + E = 100% of C
rearranged to solve for E...
E = 100% - D
E = 100% - 30%
E = 70%
using decimal form....
D/E = 0.30 / 0.70 = 0.42857, or 42.857%
I have debt to Assets given 30%. How do I get the Debt to equity?
