Question

5)

Accounts payable $499,000

Notes payable $259,000

__________________________

Current liabilities $758,000

___________________________

?Long-term debt $1,233,000

Common equity $5,086,000

_____________________________

Total liabilities and equity $7,077,000

?(Related to Checkpoint? 4.2) ?(Capital structure? analysis)??The liabilities and? owners' equity for Campbell Industries is found? here:(above chart)

a.??What percentage of the? firm's assets does the firm finance using debt? (liabilities)?

b. If Campbell were to purchase a new warehouse for $1.3 million and finance it entirely with? long-term debt, what would be the? firm's new debt? ratio? ______% ?(Round to one decimal? place.)

Answer 1

Accounts payable	499,000
Notes payable	259,000
Current liabilities	758,000
Long-term debt	1,233,000
Total liabilities	1,991,000
Common equity	5,086,000
Total liabilities and equity	7,077,000
Solution A
Debt ratio=	=1991000/7077000
Debt ratio=	28.13%
Solution B
Debt ratio with new debt=	=(1991000+1300000)/(7077000+1300000)
Debt ratio=	39.29%