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FIN515_Homework2_Michael_Anderson
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3-2 Debt Ratio
Debt ratio = Debt Ratio + Equity Ratio = 1
EM = 2.5
Equity Ratio = 1/EM
Equity Ratio = 1/2.4 = 0.40
Debt Ratio = 1 - Equity Ratio = 1 - 0.40 = 0.60%
Debt Ratio = 60%

3-3 Market/Book Value
Winston market = $75 x 800 million = $60 billion
Book Value = Assets ($10000000000 in total asset) – Liabilities ($1b current liabilities + $3b long term debt)
= $10000000000 - $4000000000 = $6000000000
Market/book = $60000000000/$6000000000 = $10000000000

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