Business
Engineering
Math
Science
Social Science
Cornerstones of Financial Accounti...
Solutions
Cornerstones of Financial Accounti...
Stock Transactions and Ethics
Marilyn Cox is the office manager for DTR Inc. DTR constructs, owns, and manages apartment complexes. Marilyn has been involved in negotiations between DTR and prospective lenders as DTR attempts to raise $425 million to use to build apartments in a growing area of Tulsa. Based on her experience with past negotiations, Marilyn knows that lenders are concerned about DTR’s debt to equity ratio. When the negotiations began, DTR had debt of S80 million and equity of $50 million. Marilyn believes that DTR’s debt to equity ratio of l .6 is probably the minimum that lenders will accept.
Marilyn is also aware that DTR issued $10 million of common stock to a long-time friend of the corporation’s president in exchange for some land just before the negotiations with lenders began. The president’s friend constructs and sells single family homes. The land is in an area zoned only for single family housing and would be an attractive site for single family homes. Thus, the land is worth at least $10 million. However, DTR does not intend to build any single family homes.
Required:
1. What would have been DTR’s debt to equity ratio if the $10 million of stock had not been issued for the land?
Concept introduction:
Debt to Equity Ratio:
Debt to equity ratio is calculated to determine the leverage position of the company. It compares the total liabilities of the company with it total shareholders’ equity. The debt to equity ratio is calculated by dividing the Total Liabilities by Total Stockholder’s Equity. The formula to calculate Debt to equity ratio is as follows:
To calculate:
The Debt to equity ratio before issuing the 10 million stocks for land.
The Debt to equity ratio before issuing the 10 million stocks for land is calculated as follows:
Total Debt before issuing the 10 million stocks for land = $80 million
Chapter 10 Solutions
Additional Business Solutions
Find more solutions based on key concepts
Show solutions addWhat is the difference between adjusting entries and correcting entries?
Corporate Financial Accounting
Describe and compare risks and opportunities.
Accounting Information Systems
Transactions for petty cash, cash short and over Cedar Springs Company completed the following selected transac...
Financial & Managerial Accounting
A 1996 bill reforming the federal government's anti-poverty programs limited many welfare recipients to only tw...
Principles of Microeconomics (MindTap Course List)
You are intrigued by Fortunes annual list of the 100 best companies to work for. Although its a long shot, you ...
Essentials of Business Communication (MindTap Course List)
The three measures of center introduced in this chapter are the mean, median, and trimmed mean. Two additional ...
Probability and Statistics for Engineering and the Sciences
Define the word manager without using the word management in your definition.
Foundations of Business (MindTap Course List)
DAYS SALES OUTSTANDING Baxley Brothers has a DSO of 23 days, and its annual sales are 3,650,000. What is its ac...
Fundamentals of Financial Management (MindTap Course List)
A manager of a large corporation recommends a 10,000 raise be given to keep a valued subordinate from moving to...
STATISTICS F/BUSINESS+ECONOMICS-TEXT
Assume that you have a short investment horizon (less than 1 year). You are considering two investments: a 1-ye...
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
American and Japanese workers can each produce 4 cars a year. An American worker can produce 10 tons of grain a...
Principles of Economics (MindTap Course List)
Why do economists make assumptions?
Brief Principles of Macroeconomics (MindTap Course List)
Define real GDP and nominal GDP. Which is a better measure of economic well-being? Why?
Principles of Macroeconomics (MindTap Course List)
BOND VALUATION Bond X is noncallable and has 20 years to maturity, an 8% annual coupon, and a 1,000 par value. ...
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
(Short-Run Loss) Suppose a firm decides to shut down in the short run. What is the resulting loss?
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Single-step income Statement and balance sheet Selected accounts and related amounts for Kanpur Co. for the fis...
Financial And Managerial Accounting
Explain why the cost of ownership may be lower with a cloud database than with a traditional, company database.
Database Systems: Design, Implementation, & Management
What is a deliverable? Name two uses for deliverables.
Principles of Information Security (MindTap Course List)
How do you translate business rules into data model components?
Database Systems: Design, Implementation, & Management
Irish Life had a business software that was only accessible to the members of the IT department. Why was this a...
Fundamentals of Information Systems
Identify and briefly describe five change models that can be used to increase the likelihood of successfully in...
Fundamentals of Information Systems
How does Proofpoint safeguard patient privacy? Could Proofpoint do the same for university and corporate emails...
Principles of Information Systems (MindTap Course List)
What are the three primary steps in creating a CNC program with the aid of a computer?
Precision Machining Technology (MindTap Course List)
While working on an engine with an excessive amount of sludge buildup: Technician A says that the presence of s...
Automotive Technology: A Systems Approach (MindTap Course List)
An overhanging beam ABC with flexural rigidity EI = 15 kip-in" is supported by a sliding support at A and by a ...
Mechanics of Materials (MindTap Course List)
Develop a set of interview questions and outline a process that you and your team might follow to assess the de...
Principles of Information Systems (MindTap Course List)
For Problem 11.12, calculate the heat loss through the frame wall if the R-19 insulation batt is replaced by fo...
Engineering Fundamentals: An Introduction to Engineering (MindTap Course List)
Redo Problem 2.7 according to the USDA system (Table 2.3). 2.7 The particle characteristics of a soil are given...
Fundamentals of Geotechnical Engineering (MindTap Course List)
How can security be both a project and a process?
Management Of Information Security
A group meeting sometimes is suggested as a useful compromise between interviews and questionnaires. In a group...
Systems Analysis and Design (Shelly Cashman Series) (MindTap Course List)
a. Where is Panelboard A located? __________ b. On what type of wall is Panelboard A fastened? __________ c. Wh...
EBK ELECTRICAL WIRING RESIDENTIAL
Repeat Problem 2.11 with the following data. 2.11 The grain-size characteristics of a soil are given in the fol...
Principles of Geotechnical Engineering (MindTap Course List)
Two materials, A and B, are to be separated using two unit operations, 1 and 2. The feed has 10 tons/h A and 4 ...
Solid Waste Engineering
The cable AOB weighs 5.2 N/m. When the horizontal 30-N force is applied to the roller support at B, the sag in ...
International Edition---engineering Mechanics: Statics, 4th Edition
What advantage does the motor-generator type of variable-speed drive have over rectifier-type DC supplies?
Electric Motor Control
Use the data in the steam tables (Appendix A) to answer the following: A. Find the change in internal energy wh...
Fundamentals of Chemical Engineering Thermodynamics (MindTap Course List)
The beam shown in Figure P5.5-16 is laterally braced at A, B, C, and D. Is a W14132 adequate for Fy=50 ksi? a. ...
Steel Design (Activate Learning with these NEW titles from Engineering!)
In front-wheel drivetrains, the CV joint nearer the transaxle is the____. a. inner joint b. inboard joint c. ou...
Automotive Technology
What antivirus program, if any, currently is installed on your computer? Is it scheduled to update virus defini...
Enhanced Discovering Computers 2017 (Shelly Cashman Series) (MindTap Course List)
Your CFO has approved installing new backbone cabling on your schools campus. One of the buildings is particula...
Network+ Guide to Networks (MindTap Course List)
Determine the reactions at the supports for the structures shown. FIG.P3.23
Structural Analysis
