Question

The liabilities and? owners' equity for Campbell Industries is found? here: a. What percentage of the?...

The liabilities and? owners' equity for Campbell Industries is found? here:

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?
a. What percentage of the? firm's assets does the firm finance using debt? (liabilities)?
The fraction of the? firm's assets that the firm finances using debt is
nothing?%. ?(Round to one decimal? place.)

Accounts payable $536,000

Notes payable $258,000

Current liabilities $794,000

Long-term debt $1,108,000

Common equity $5,080,000

Total liabilities and equity $6,982,000

Homework Answers

Answer #1

a) Long Term Debt = 1108000 , Current Liabilities = 794000 Total Debt = 1108000 +794000 = 1902000
Total Assets = Total Liabilities and equity = 6982000
percentage of the? firm's assets does the firm finance using debt = (Total Debt/ Total Assets)*100% = 0.2724 or 27.2%
b) Total New debt = 1902000 + 1,300,000 = 3,202,000
Total New assets = 6982000 + 1,300,000 = 8,282,000
Please rate positively and in case of doubt please discuss
New Debt Ratio = Total New debt/Total New assets = 0.3866 or 38.7%

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