Assume Gamma borrows $5 million to finance its expansion.Gamma's debt ratio immediately after the borrowing will be (rounded):

Question

Quizplus · Accepted Answer

Debt ratio = Total debt / Total assets
Assuming Gamma's total assets remain the same, the debt ratio will be:
Debt ratio = (Total debt + new borrowing) / Total assets
Debt ratio = ($5 million + Current Total Debt) / Current Total Assets
Since the question does not provide information on Gamma's current debt or assets, we cannot calculate the exact debt ratio. However, we can choose the closest estimate, which is B)0.23.

Assume Gamma Borrows $5 Million to Finance Its Expansion