Keystone corporation's balance sheet showed the following liability and stockholders' equity amounts: current liabilities, $100,000; bonds payable, $150,000; long-term lease obligations, $20,000; deferred income tax liability, $5,000; and total stockholders' equity, $500,000. the debt-to-equity ratio is

The debt-to-equity ratio is 0.35

Explanation:

The debt to equity ratio is a ratio which includes debt and equity to check the financial leverage, profitability, performance of the company.

In mathematically,

Debt equity ratio = Debt ÷ Equity

where,

debt includes bonds payable, long term lease obligations, and deferred income tax liability

So, debt = $150,000 + $20,000 + $5,000 = $175,000

And equity = total stockholder equity is $500,000

So, debt equity ratio = $175,000 ÷ $500,000 = 0.35

Hence, The debt-to-equity ratio is 0.35

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-lavira : )

one of the appeals of a sole proprietorship is that business expenses are kept separate from your personal income tax return