Assets Total Debt and Equity Current Assets $200,000,000 Total debt equity $220,000,000 Common stock $30,000,000 Capital Surplus
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Question:
Assets | Total Debt and Equity | |||||
Current Assets | $200,000,000 | Total debt equity | $220,000,000 | |||
Common stock | $30,000,000 | |||||
Capital Surplus | 80,000,000 | |||||
Accumulated retained earnings | 170,000,000 | |||||
Net Fixed Asset | $300,000,000 | Total shareholders Equity | $280,000,000 | |||
Total Asset | $500,000,000 | Total debt and shareholders equity | $500,000,000 |
a) What is the debt equity ratio on book values
b) Suppose the market value of the company's debt is $225 million and the market value of equity is $670million. What is the debt equity ratio based on market values?
c) Which is more relevant, the debt equity ratio based on book values or market values? Why?
Related Book For
Corporate Finance
ISBN: 978-0077861759
11th edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
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