Problem 3-6 Debt Management Ratios (LG3-3)

You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $34.00 million in assets with $31.00 million in debt and $3.00 million in equity. LotsofEquity, Inc. finances its $34.00 million in assets with $3.00 million in debt and $31.00 million in equity.

Calculate the debt ratio.(Round your answers to 2 decimal places.)

Debt ratioLots of Debt%Lots of Equity%

Calculate the equity multiplier.(Round your answers to 2 decimal places.)

Equity multiplierLots of DebttimesLots of Equitytimes

Calculate the debt-to-equity.(Round your answers to 2 decimal places.)

Debt-to-equityLots of DebttimesLots of Equitytimes