Harrison, Inc., has the following book value balance sheet: Balance Sheet Assets Liabilities and equity Current assets
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Question:
Harrison, Inc., has the following book value balance sheet:
| Balance Sheet | ||||
| Assets | Liabilities and equity | |||
| Current assets | $ 140,000,000 | Total debt | $ 250,000,000 | |
| Equity | ||||
| Common stock | 30,000,000 | |||
| Capital surplus | 77,000,000 | |||
| Net fixed assets | 415,000,000 | Accumulated retained earnings | 198,000,000 | |
| Total shareholders' equity | $ 305,000,000 | |||
| Total assets | $ 555,000,000 | Total debt and shareholders' equity | $ 555,000,000 | |
| a. | What is the debt–equity ratio based on book values? |
| b. | Suppose the market value of the company's debt is $251.5 million and the market value of equity is $685 million. What is the debt–equity ratio based on market values? |
Expert Answer:
Related Book For 
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1285190907
8th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
