a-retail-company-has-2000000-in-liabilities-and-1000000-in-equity-calculate-the-

Question

A retail company has $$2,000,000 in liabilities and 1$$,000,000 in equity. Calculate the debt to equity ratio and interpret its meaning.

Accepted Answer

2.0, indicating the company relies more on debt than equity.

Answer

0.5, indicating the company relies more on equity than debt.

Answer

3.0, indicating the company is highly leveraged.

Answer

1.0, indicating equal reliance on debt and equity.

A retail company has \$2,000,000 in liabilities and \$1,000,000 in equity. Calculate the debt to equity ratio and interpret its meaning.