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BALANCE SHEET REVIEW: What is the company debt-to-equity ratio? (1) Total liabilities are $8.4M and shareholders equity is $12.6M (2) Total assets are $21M and equity represents 60% of total assets

GMAT · 2022 · Data Insights

Question:
BALANCE SHEET REVIEW: What is the company debt-to-equity ratio? (1) Total liabilities are $8.4M and shareholders equity is $12.6M (2) Total assets are $21M and equity represents 60% of total assets

Options

(A) Statement (1) ALONE is sufficient, but statement (2) alone is not sufficient

(B) Statement (2) ALONE is sufficient, but statement (1) alone is not sufficient

(D) EACH statement ALONE is sufficient

(E) Statements (1) and (2) TOGETHER are NOT sufficient

Answer: (D) EACH statement ALONE is sufficient

Explanation:
Statement (1): Debt-to-equity = $8.4M/$12.6M = 0.67. Sufficient. Statement (2): Equity = $21M × 0.60 = $12.6M. Liabilities = $21M - $12.6M = $8.4M. Ratio = $8.4M/$12.6M = 0.67. Sufficient.

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BALANCE SHEET REVIEW: What is the company debt-to-equity ratio? (1) Total liabilities are $8.4M and shareholders equity is $12.6M (2) Total assets are $21M and equity represents 60% of total assets

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BALANCE SHEET REVIEW: What is the company debt-to-equity ratio? (1) Total liabilities are $8.4M and shareholders equity is $12.6M (2) Total assets are $21M and equity represents 60% of total assets

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