The 2008 financial statements for Carmela's Catering are as follows: The firm has 100,000 shares of common stock outstanding with a market value of $8 a share.
-Refer to the information above. What is the financial debt-to-capital ratio, based on the market value of the equity? Round your answer to the nearest tenth of a percent.

Question

The 2008 financial statements for Carmela's Catering are as follows:   The firm has 100,000 shares of common stock outstanding with a market value of $8 a share.
-Refer to the information above. What is the financial debt-to-capital ratio, based on the market value of the equity? Round your answer to the nearest tenth of a percent.

Quizplus · Accepted Answer

The financial debt-to-capital ratio is calculated by dividing the market value of the debt by the market value of the equity. In this case, the market value of the debt is $100 million and the market value of the equity is $450 million. Therefore, the financial debt-to-capital ratio is $100 million / $450 million = 22.2%. Rounding to the nearest tenth of a percent, the answer is 22.0%.

The 2008 Financial Statements for Carmela's Catering Are as Follows