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?
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?
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".