Calculating the Debt-to-Equity Ratio. Robert owns a $140,000 town house and still has an unpaid mortgage of $110,000. In addition to his mortgage, he has the following liabilities:

Visa $ 565 MasterCard 480 Discover card 395 Education loan 920 Personal bank loan 800 Auto loan 4,250 Total $7,410 Robert’s net worth (not including his home) is about $21,000. This equity is in mutual funds, an automobile, a coin collection, furniture, and other personal property. What is Robert’s debt-to-equity ratio?

Has he reached the upper limit of debt obligations? Explain.

LO6-3