The following information has been derived from the financial statements of Boutwell Company:
Current assets $640,000
Total assets 990,000
Long-term liabilities 130,000
Current ratio 3.2
The company’s debt to equity ratio is

Answer (A) is correct. Boutwell’s current liabilities are $200,000($640,000 ÷ 3.2) Thus its total debt load is $330,000 ($200,000 + $130,000) and its total equity is $660,000 ($990,000 – 330,000) Therefore Boutwell’s debt to equity ratio is 0.5 to 1 ($330,000 ÷ $660,000)