document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1071543>Question 1071543</A>: <I><SPAN STYLE=\"word-break: break-all;\"> If a firms debt-to-equity ratio is 2.6 , what is its total debt to total asset ratio? Show your answer to the nearest .1%. If your answer is 45.6%, enter your answer as 45.6 rather than 45.6% or .456. </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #686548 by </B><A HREF=/tutors/aboutme.mpl?userid=Theo><B>Theo(13342)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=Theo><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=Theo><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=686548\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> the debt to equity ratio is 2.6\r<BR>\n" );
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document.write( "let D = debt.<BR>\n" );
document.write( "let E = equity<BR>\n" );
document.write( "let T = D + E\r<BR>\n" );
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document.write( "D/E = 2.6\r<BR>\n" );
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document.write( "solve for D to get D = 2.6 * E\r<BR>\n" );
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document.write( "D / (D + E) becomes (2.6 * E) / (2.6 * E + E)\r<BR>\n" );
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document.write( "simplify to get:\r<BR>\n" );
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document.write( "D / (D + E) = (2.6 * E) / (3.6 * E).\r<BR>\n" );
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document.write( "simplify further to get:\r<BR>\n" );
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document.write( "D / (D + E) = 2.6 / 3.6.\r<BR>\n" );
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document.write( "simplify further to get:\r<BR>\n" );
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document.write( "D / (D + E) = .722 = 72.2%.\r<BR>\n" );
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document.write( "this assumes that total assets are equal to debt + equity, which is believe is correct.\r<BR>\n" );
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document.write( "a simpler way to calculate it would be:\r<BR>\n" );
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document.write( "D/E = 2.6 is equivalent to D/E = 2.6 / 1\r<BR>\n" );
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document.write( "this makes D = 2.6 and E = 1.\r<BR>\n" );
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document.write( "D / (D + E) therefore becomes 2.6 / (2.6 + 1) = 2.6 / 3.6.\r<BR>\n" );
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document.write( "same result derived somewhat less painfully.\r<BR>\n" );
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document.write( " </SPAN>\n" );
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