[mskcle]

I had a SIM in Becker that asked for the Debt to Equity Ratio and the Debt to Total Capital Ratio that threw me for a loop. The analytical definitions said to use total liabilities for both as the numerator for debt, but the solution ignored using all liabilities and only used the current maturing debt and long term debt values for the numerator. I am confused as to which it is in case this appears on the actual exam.. Thoughts?

[mskcle]

??

[jewfromaxxi]

For becker I know it says that Invested capital is equal to Assets – Operating liabilities or Debt + Long term Equity. However, this should only impact your ratios that involve invested capital and not the debt to equity ratio. Hope this helps in someway.

[jewfromaxxi]

oops i meant long term debt not equity

[mskcle]

I looked it up online and found that the debt for the numerator is only debts that are interest bearing which makes more sense given the SIM. I just find it confusing that they would give an analytical definition formula in their SIM that is misleading

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