What does the debt to equity ratio represent

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Question 1) Using Trap Adventures, Inc.'s income statement, evaluate the operations for the month of December. Complete a common-size income statement using sales as the base number.

1. What is the largest percentage?
2. What is the smallest percentage?
3. What recommendations could be made to increase Trap's net income?

Question 2) Currently, Trap Adventures, Inc. does not own any loans or bank notes (long-term liabilities).

1. What would happen if Trap decides to obtain a bank loan for $25,000 to fund daily operations?

2. How would this transaction impact the financial statements - which accounts would be affected?

3. What is the debt to equity ratio?

4. What does the debt to equity ratio represent?

Attachment:- equity ratio.rar

Reference no: EM132451290

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