Bostian, Inc. has total assets of $765,000. Its total debt outstanding is $185,000. The Board of...
Bostian, Inc. has total assets of $765,000. Its total debt outstanding is $185,000. The Board of Directors has directed the CFO to move towards a debt-to-assets ratio of 55%. How much debt must the company add or subtract to achieve the target debt ratio?
Homework Answers
Target amount of debt = Total assets * Target debt ratio = $765,000 * 55% = $420,750
Change in amount of debt outstanding = $420,750 - $185,000
Change in amount of debt outstanding = $235,750
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