Accounts payable $466,000 Notes payable $250,000 Current liabilities $716,000 Long-term debt $1,166,000 Common equity $4,883,000 Total liabilities and equity $6,765,000 a. What percentage of the firm's assets does the firm finance using debt (liabilities)? b. If Campbell were to purchase a new warehouse for $1.1 million and finance it entirely with long-term debt, what would be the firm's new debt ratio?
Accounts payable $466,000 Notes payable $250,000 Current liabilities $716,000 Long-term debt $1,166,000 Common equity $4,883,000 Total liabilities and equity $6,765,000 a. What percentage of the firm's assets does the firm finance using debt (liabilities)? b. If Campbell were to purchase a new warehouse for $1.1 million and finance it entirely with long-term debt, what would be the firm's new debt ratio?
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter7: Financial Activities
Section: Chapter Questions
Problem 7QE
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Question
Accounts payable $466,000
Notes payable $250,000
Current liabilities $716,000
Long-term debt $1,166,000
Common equity $4,883,000
Total liabilities and equity $6,765,000
a. What percentage of the firm's assets does the firm finance using debt (liabilities)?
b. If Campbell were to purchase a new warehouse for
$1.1
million and finance it entirely with long-term debt, what would be the firm's new debt ratio?Question content area bottom
Part 1
a. What percentage of the firm's assets does the firm finance using debt (liabilities)?
The fraction of the firm's assets that the firm finances using debt is
27.827.8%.
(Round to one decimal place.)Part 2
b. If Campbell were to purchase a new warehouse for
$1.1
million and finance it entirely with long-term debt, what would be the firm's new debt ratio?The new debt ratio will be
enter your response here%.
(Round to one decimal place.)Expert Solution
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