Practice Problem 17.1


Practice Problem 17.1

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sheridan
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It says a 25% debt-to-equity ratio means than debt is 20% of total capital and equity is 80% of total capital.

Why isn't it 25% and 75%?  What am I missing?

[NEAS: Suppose total capital is $100, debt is $20, and equity is $80. The ratio of debt to equity is $20 / $80 = 25%.]


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