Question: PROBLEM 4-2: Debt to Capital Ratio Kayes Kitchenware has a market/book ratio equal to 1. Its stock price is $12 per share and it has

PROBLEM 4-2: Debt to Capital Ratio

Kayes Kitchenware has a market/book ratio equal to 1. Its stock price is $12 per share and it has 4.8 million shares outstanding. The firms total capital (TIC) is $110 million, and it finances with only debt and common equity. What is its debt-to-capital ratio?

Hint:

Since the Market to Book (M/B) is 1 then Market Value of Equity (MVE) = Book Value of Equity (BVE). Think MVA formula.

What is its Market Value of Equity (MVE) - Think MVA?

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