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What is the debt to equity ratio (using total liabilities)? Use the attached financial data to calculate the ratios for 2021. Round to the nearest decimal.

\begin{tabular}{lll}
\multicolumn{2}{c}{ Financial Data for American Eagle Outfitters (AEO) } & \\
& & \\
Revenues & [tex]$2021$[/tex] & [tex]$2020$[/tex] \\
Cost of Sales & [tex]$\$[/tex] 5,011[tex]$ & $[/tex]\[tex]$ 3,759$[/tex] \\
Total Operating Expenses & [tex]$3,019$[/tex] & [tex]$2,611$[/tex] \\
Interest Expense & [tex]$1,222$[/tex] & [tex]$977.3$[/tex] \\
Income Tax Expense & [tex]$34.6$[/tex] & [tex]$24.6$[/tex] \\
& [tex]$139.3$[/tex] & [tex]$83.0$[/tex] \\
Cash + Equivalents & & \\
A/R & [tex]$434.8$[/tex] & [tex]$850.5$[/tex] \\
Inventories & [tex]$286.7$[/tex] & [tex]$146.1$[/tex] \\
Prepaid Expenses & [tex]$553.5$[/tex] & [tex]$405.4$[/tex] \\
Total Current Assets & [tex]$122$[/tex] & [tex]$121$[/tex] \\
Total Assets & [tex]$1,397$[/tex] & [tex]$1,523$[/tex] \\
& [tex]$3,787$[/tex] & [tex]$3,435$[/tex] \\
A/P & & \\
Total Current Liabilities & [tex]$231.8$[/tex] & [tex]$255.9$[/tex] \\
Long-term Debt & [tex]$842.9$[/tex] & [tex]$858.5$[/tex] \\
& [tex]$341.0$[/tex] & [tex]$325.3$[/tex] \\
\end{tabular}

Select one:
A. [tex]$123.3 \%$[/tex]
B. [tex]$16.5 \%$[/tex]



Answer :

GinnyAnswer
To calculate the debt to equity ratio, follow these steps:

1. Determine Total Liabilities for the year 2021:
- Total Current Liabilities: [tex]$231.8 million - Long-term Debt: $[/tex]842.9 million
- Total Liabilities for 2021 = Total Current Liabilities + Long-term Debt
[tex]\[ \text{Total Liabilities 2021} = 231.8 + 842.9 = 1074.7 \text{ million} \][/tex]

2. Identify Total Equity for the year 2021:
- Total Equity for 2021: $341.0 million

3. Calculate the Debt to Equity Ratio:
- Debt to Equity Ratio is calculated as the Total Liabilities divided by Total Equity, then multiplied by 100 to get a percentage.
[tex]\[ \text{Debt to Equity Ratio} = \left(\frac{\text{Total Liabilities 2021}}{\text{Total Equity 2021}}\right) \times 100 \][/tex]
Substituting the values in:
[tex]\[ \text{Debt to Equity Ratio} = \left(\frac{1074.7}{341.0}\right) \times 100 \approx 315.16129032258067 \% \][/tex]

4. Round the result to the nearest decimal:
- Rounding 315.16129032258067 to the nearest decimal gives:
[tex]\[ 315.2 \% \][/tex]

Thus, the debt to equity ratio for 2021 is approximately 315.2%. Therefore, none of the provided options (A or B) are correct based on the precise calculation using the given financial data.

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