Answered: If you were (or are) an investor, would…

If you were (or are) an investor, would you lend your own money to a company with a Debt/Assets ratio (a "Total Debt Ratio") of 87%?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter7: Analysis Of Financial Statements

Section: Chapter Questions

Problem 2P: Vigo Vacations has $200 million in total assets, $5 million in notes payable, and $25 million in...

See similar textbooks

Related questions

Q: A company finances its operations and growth opportunities, using common equity and debt. The…

A: The WACC is stands for weighted average cost of capital. The weighted average cost of capital is…

Q: A firm has a debt to equity ratio of 40%, debt of $600,000, and net income of $100,000. What is the…

A: Debt to Equity ratio = Debt/Equity 40% = $600,000 / Equity Equity = $600,000 / 40% Equity = $1500000

Q: 4. A firm has a debt-total asset ratio of 75 percent, net income 20 million and total assetsAED 800…

A: The return on equity is calculated as net income divided by shareholders' equity.

Q: A firm has an ROE of 4.4%, a debt-to-equity ratio of 0.7, and a tax rate of 35% and pays an interest…

A: Given:ROE of firm =4.4%Debt to equity ratio=0.7Tax rate=35%Interest on debt =5%To compute:Operating…

Q: Andyco, Inc., has the following balance sheet and an equity market-to-book ratio of 1.5. Assuming…

A: For calculation of WACC, we need to use market value of debt and equity. Weight can be calculated…

Q: Andyco, Inc., has the following balance sheet and an equity market-to-book ratio of 1.4. Assuming…

A: Market value of equity = Market to book ratio * Book value of equity = 1.4*570 =798

Q: Queen, Inc., has a total debt ratio of .22. a. What is its debt-equity ratio? b. What…

A: Information Provided: Total debt ratio = 0.22

Q: A firm has a long-term debt–equity ratio of 0.50. Shareholders’ equity is $2.0 million. Current…

A: Debt equity ratio- 0.50 Equity - $2.0 million CA- $ 320,000 Total assets - $3,200,000 Current ratio…

Q: Garwryk, inc., which is finance with debt and equity, presently has a debt ratio of 78 percent. What…

A: Equity multiplier or firm multiplier is a ratio of total assets to stockholder's equity it says how…

Q: has a debt ratio of 55% What is its debt/equity ratio?

A: The total equity to total debt ratio is a measure of the company's financial health. The total…

Q: Compute the debt-to-equity ratio for each of the following companies. Which company appears to have…

A: Debt to equity ratio is used to evaluate the financial leverage of the company.

Q: How do you determine the mix (percentages or weights) of debt vs equity from the Debt to Equity…

A: A company has several sources from where it can raise funds. It can issue equity shares and the…

Q: Andyco, Inc., has the following balance sheet and an equity market-to-book ratio of 1.6. Assuming…

A: Given: Market to book ratio = 1.6 Market value of debt = $400 Book value of equity = $640 Market to…

Q: A firm has total debt of $1,400 and a debt–equity ratio of .25. What is the value of the total…

A: Debt = $1400 Debt to equity ratio = 0.25 Equity = debt/Debt to equity ratio = 1400/0.25…

Q: What is the cost of equity for a firm where the required return on assets is 15.71%, the cost of…

Q: a. What percentage of the firm's assets does the firm finance using debt (liabilities)? b. If…

A: To run the business, companies arrange the funds from external sources and purchase various required…

Q: Approximately how much does the outstanding debt cost shareholders every year? a. $50 b. $33 c.…

A: Outstanding debt arises due to debt owned by the company and that too for a long period of time. To…

Q: Calculate the WACC using the following information: Debt-Equity ratio is 50%. Cost of debt is 8.00%…

A: Given: Debt Equity ratio = 50% Cost of debt = 8% Cost of equity = 10% Tax rate = 35%…

Q: Using WACC, ignoring taxes, compute the cost of capital of a company with debt ratio of 0.75:1 and…

A: Debt ratio = 0.75 Equity ratio = 1-0.75 = 0.25 Debt cost = 4% Equity cost = 5%

Q: Garwryk, inc., which is financed with debt and equity, presently has a debt ratio of 78 percent.…

A: Total assets depend on the components of debt and equity and changes according to that.

Q: ppose a company named Arts Pvt. Ltd has taken a loan from a bank for business expansion at a rate…

A: Cost of debt is effective interest or cost incurred by company for deploying the debt.

Q: Ab Inc has a total debt ratio of 0.10 What is the debt equity ratio and equity multiplier?

A: The debt-equity ratio is determined by debt divided by equity, whereas the equity multiplier is…

Q: Identify the ratio that is relevant to answering each of the following questions.a. How much net…

A: Hello, I am only answering first three sub-parts as per the policy and if you want the others to be…

Q: Bartley Barstools has an equity multiplier of 3.8, and its assets are financed with some combination…

A: Equity multiplier is ratio of equity and total assets. It means, equity multiplier is equity divided…

Q: Andyco, Inc., has the following balance sheet and an equity market-to-book ratio of 1.7. Assuming…

A: In the given question we need to calculate the weights of debt and equity for WACC calculation.…

Q: A firm has an ROE of 3%, a debt-to-equity ratio of .5, and a tax rate of 35% and pays an interest…

A: ROE=3% Debt to equity ratio = 0.5 Tax rate = 35% Interest Rate = 6%

Q: Assume Lavender Corporation has a market value of $4 billion of equity and a market value of $19.8…

A: Therefore, the weight of equity for calculating the WACC is 16.81%.

Q: A firm has a debt to equity ratio of 50%, debt of $300,000, and net income of $90,000. The return on…

A: Debt to equity ratio = 50% Debt = $ 300,000 Equity = Debt/Debt to equity ratio =…

Q: ased on these numbers, how well is the company doing? How are their levels of debt financing?

A: Solvency ratio can be defined as those financial ratios with the help of which it can be determined…

Q: What is the cost of debt if a company has $100,000 of debt with an annual interest rate of 5% and an…

A: Solution:- Calculation of debt as follows under:- Introduction:- Company has debt of $100,000 Annual…

Q: A firm has a debt -to -equity of 0.69 and a market -to- book ratio of 3.0. What is the ratio of the…

A: Given: Debt to equity = 0.69 Market value of equity to book value of equity ratio = 3

Q: A company has an equity multiplier of 3.2, and its assets are financed with some combination of…

A: The debt to asset ratio is a leverage ratio that indicates the percentage of assets that are being…

Q: Company A has a debt to equity ratio to one. Its cost of equity is 20% and its cost of debt is 10%.…

A: WACC is cost incurred by entity to finance its capital structure. It is sum of weighted individual…

Q: A firm has a debt-to-equity of 0.57. What is the debt-to-total assets ratio?

A: Given:Debt to equity or D/E = 0.57A = Total assetsD/A = debt to total assets

Q: ST-4 Sheth Corporation has a return on assets ratio of 6 percent. If the debt to total assets ratio…

A: Return on Assets Ratio = 6% Debt to Total Asset Ratio = 0.50 Required What is the firm's return on…

Q: What do the following ratios reveal about the financial health of a company? And how do I calculate…

A: Long Term Debt Paying Ability Ratios are also known as Leverage or Capital Structure Ratios. These…

Q: Calculate the WACC using the following information: Debt-Equity ratio is 50%. Cost of debt is 8.00%…

A: WACC is the weighted average cost of capital In order to calculate the WACC, first of all lets…

Q: Bowsman Fried Chicken Company has a debt-equity ratio of 0.80. Return on assets is 7.9%, and total…

A: Given the following information: Debt-equity ratio: 0.80 Return on assets: 7.9% Total equity:…

Q: Toby’s has a profit margin of 8.6 percent, a return on assets of 14.5 percent, and a debt to equity…

A: The return on equity can be calculated with the help of DuPont equation

Q: Triano Train Transports shows the following on their most recent balance sheet: Current Assets:…

A: Ratio is a tool which is used to measure the firm’s performance and growth by establishing relation…

Q: Calculate the WACC using the following informatio: Debt-Equity ratio is 50%. Cost of debt is 8.00%…

A: Given:Debt equity ratio=50%Cost of debt=8%Cost of equity=10%Tax rate=35%

Q: A firm has a return on assets of 7.8 percent and a cost of equity of 11.9 percent. What is the…

A: The return on assets will be the weighted average cost of capital(WACC) which can be calculated by…

Question

If you were (or are) an investor, would you lend your own money to a company with a Debt/Assets ratio (a "Total Debt Ratio") of 87%?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Assume you are given the following relationships for the Haslam Corporation: Calculate Haslam’s profit margin and liabilities-to-assets ratio. Suppose half its liabilities are in the form of debt. Calculate the debt-to-assets ratio.
A firm has an ROE of 3%, a debt-to-equity ratio of .5, and a tax rate of 35% and pays an interest rate of 6% on its debt. What is its operating ROA?
A firm has total assets of $638,727, current assets of $203,015, current liabilities of $122,008, and total debt of $348,092. What is the debt-equity ratio? Can you provide the forumla?
Suppose a company has debt of $71 million and a debt to total assets ratio of 0.1. This means that the company's debt-equity ratio is _____
If a company’s debt-to-value ratio is 40% calculate its debt-to-equity ratio. If the dollar value of the company’s debt is $200 million calculate its market value of equity and its market value of assets. Show all calculations.
A firm has a debt to equity ratio of 50%, debt of $300,000, and net income of $90,000. What is he return on equity?
Find the debt-to-equity ratio for Flowers4You if the company has $15,000 in business loans and retained earnings of $45,000.
A firm has an ROE of 4.4%, a debt-to-equity ratio of 0.7, and a tax rate of 35% and pays an interest rate of 5% on its debt. What is its operating ROA (round to 2 decimal places)? ROA ?%
Queen, Inc., has a total debt ratio of .22. a. What is its debt-equity ratio? b. What is its equity multiplier?
Using the Du Pont method, evaluate the effects of the following relationships for the Butters Corporation. a. Butters Corporation has a profit margin of 5 percent and its return on assets (investment) is 22.5 percent. What is its assets turnover? (Round your answer to 2 decimal places.) b. If the Butters Corporation has a debt-to-total-assets ratio of 55.00 percent, what would the firm's return on equity be? (Input your answer as a percent rounded to 2 decimal places.) c. What would happen to return on equity if the debt-to-total-assets ratio decreased to 50.00 percent? (Input your answer as a percent rounded to 2 decimal places.)
What are the annual sales for a firm with $800,000 in debt, a total debt ratio of .06, and an asset turnover of 2?
You are given the following information: Cash=$407, inventory= $579, Notes payable=$301, Long-term debt=$1,680, Accounts payable=$393, Accounts Receivable=$265, Net fixed Assets=$6,141 and total shareholder equity =???. Build a balance sheet and solve for and include shareholder's equity. a. what is the company's quick ratio? b. what is the company's total debt to equity ratio? c. what is the company's total working capital?