1

I've read that to calculate equity-to-assets using assets-to-equity the following can be done:

assets-to-equity = 40%

equity-to-assets = 1/0.4 = 2.5

Why does that work out?

3

Because the formulae are the inverse of each other, and the way to compute the inverse of X is 1/X. That's just the mathematical definition of "inverse".

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.