Bartley barstools has a market/book ratio equal to 1. Its stock price is $14 per share, and it has 5 million shares outstanding. The firm's total capital is $125 million, and it finances with only debt and common equity. What is its debt-to-capital ratio?
Added by Meghan H.
Step 1
Total debt = Total capital - Total equity Total debt = $125 million - ($14 per share * 5 million shares) Total debt = $125 million - $70 million Total debt = $55 million Show more…
Show all steps
Your feedback will help us improve your experience
Lottie Adams and 70 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
Book Co. has 1.8 million shares of common equity with a par (book) value of $1.25, retained earnings of $31.8 million, and its shares have a market value of $50.99 per share. It also has debt with a par value of $19.1 million that is trading at 101% of par. a. What is the market value of its equity? b. What is the market value of its debt? c. What weights should it use in computing its WACC?
Madhur L.
A firm has current assets that could be sold for their book value of $14 million. The book value of its fixed assets is $52 million, but they could be sold for $82 million today. The firm has total debt with a book value of $32 million, but interest rate declines have caused the market value of the debt to increase to $42 million. What is the ratio of the market value of equity to its book value? (Round your answer to 2 decimal places.) Market-to-book ratio
Rahul M.
A business purchased for $\$ 650,000$ in 2005 is sold in 2008 for $\$ 850,000 .$ What is the annual rate of return for this investment?
Exponential and Logarithmic Functions
Financial Models
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
18,000,000+
Students on Numerade
Trusted by students at 8,000+ universities
Watch the video solution with this free unlock.
EMAIL
PASSWORD