Refer to the balance sheet above. When using the book value of equity, the debt-equity ratio for Luther in 2006 is closest to ________

Question

Luther Corporation
Consolidated Balance Sheet
December 31, 2006 and 2005 (in $ millions)
Assets 2006 2005 Liabilities and Stockholders' Equity 2006 2005
Current Assets Current Liabilities
Cash 65.6 58.5 Accounts payable 88.8 73.5
Accounts receivable 54.3 39.6 Notes payable / short-term debt 10.7 9.6
Inventories 45.8 42.9 Current maturities of long-term debt 38.7 36.9
Other current assets 5.5 3.0 Other current liabilities 6.0 12.0
Total current assets 171.2 144.0 Total current liabilities 144.2 132.0

Long-Term Assets Long-Term Liabilities
Land 65.3 62.1 Long-term debt 234.4 168.9
Buildings 109.4 91.5 Capital lease obligations
Equipment 116.3 99.6
Less accumulated
depreciation (57.9) (52.5) Deferred taxes 22.8 22.2
Net property, plant, and equipment 233.1 200.7 Other long-term liabilities --- ---
Goodwill 60.0 -- Total long-term liabilities 257.2 191.1
Other long-term assets 63.0 42.0 Total liabilities 401.4 323.1
Total long-term assets 356.1 242.7 Stockholders' Equity 125.9 63.6

Total Assets 527.3 386.7 Total liabilities and Stockholders' Equity 527.3 386.7

A) 4.51
B) 2.25
C) 1.13
D) 3.16

Answer 1

Answer: B