Question

5) Accounts payable $499,000 Notes payable $259,000 __________________________ Current liabilities $758,000 ___________________________ ?Long-term debt $1,233,000 Common...

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.)

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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%
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