Question

DEBT TO CAPITAL RATIO Kaye's Kitchenware has a market/book ratio equal to 1. Its stock price...

DEBT TO CAPITAL RATIO

Kaye's Kitchenware has a market/book ratio equal to 1. Its stock price is $15 per share and it has 4.9 million shares outstanding. The firm's total capital is $135 million and it finances with only debt and common equity. What is its debt-to-capital ratio? Round your answer to two decimal places.


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Homework Answers

Answer #1

debt to capital = 1- equity to capital ratio ( because only debt and equity are used for financing)

equity to capital ratio = equity value/total capital

equity value = stock price per share * no. of outstanding shares

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