Corp.'s assets are $625,000, and its total debt outstanding is $185,000.The new CFO wants to employ a debt ratio of 55%.How much debt must the company add or subtract to achieve the target debt ratio?
A)$158,750
B)$166,688
C)$175,022
D)$183,773
E)$192,962

Question

Quizplus · Accepted Answer

The correct answer is A.The company's current debt ratio is 185,000 / 625,000 = 29.6%. To achieve a debt ratio of 55%, the company must increase its debt by $158,750.

Corp'S Assets Are $625,000, and Its Total Debt Outstanding Is