Problem $3-5$ Debt Management Ratios $($LG$3-3)$

You are considering a stock investment in one of two firms $($LotsofDebt$,$ Incorporated and LotsofEquity, Incorporated$),$ both of which

operate in the same industry. LotsofDebt, Incorporated finances its $$38\mathrm{.}75$ million in assets with $$34\mathrm{.}00$ million in debt and $$4\mathrm{.}75$

million in equity. LotsofEquity, Incorporated finances its $$38\mathrm{.}75$ million in assets with $$4\mathrm{.}75$ million in debt and $$34\mathrm{.}00$ million in equity.

Calculate the debt ratio.

Calculate the equity multiplier.

Calculate the debt$-$to$-$equity.

Complete this question by entering your answers in the tabs below.

Debt ratio

Equity

multiplier

Debt to equity

Calculate the debt ratio.

Note: Round your answers to $2$ decimal places.