please assist me in solving the problem and show step by step working. Thanks

Anchor Ltd. has the following financial structure represented on a portion of its balance

sheet.

Accounts Payable $700,000

Short-term debt $450,000

Current liabilities $1,150,000

Long term debt $900,000

Shareholder equity $1,200,000

Total $3,250,000

Anchor Ltd. has no excess cash and the market value of its equity is 1.5 million.

Required:

a) Calculate Anchor Ltd.'s debt ratio and debt-to-enterprise value ratio. [10 marks]

b) Should Anchor Ltd. need additional financing for investments, would you recommend

management to seek debt or equity financing? Indicate which of the two ratios

calculated would be more meaningful to a potential investor and why? [6.7 marks]