| Investing Lesson 3 |
| Quiz: How to Analyze a Balance Sheet |
Explanation of $16,000 Question
Total Debt
-----(divided by)-----
Shareholder Equity
The company has $385 million in long term debt and $25 million in short term debt. $385m + $25m = $410 million total debt. The shareholder equity was $4 billion. Plug the numbers into the formula:
Total Debt = $410,000,000
-----(divided by)-----
Shareholder Equity = $4,000,000
The answer is .1025 (or 10.25%)
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