Question

Curley’s Fried Chicken Kitchen operates two southern cooking restaurants in St. Louis, Missouri, and has the following financial structure:
Accounts payable ........ $ 100,000
Short-term debt ........ 400,000
Current liabilities ........ $ 500,000
Long-term debt ........ $2,000,000
Owner’s equity ........ 1,500,000
Total ............ $4,000,000
The firm is considering an expansion that would involve raising an additional $2 million.
a. What are the firm’s debt ratio and interest-bearing debt ratio in its present capital structure?
b. If the firm wants to have a debt ratio of 50 percent, how much equity does the firm need to raise in order to finance the expansion?



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  • CreatedOctober 31, 2014
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