ZuoTi.Pro
Question

you are considering a stock investment in one of two firms( lots of debt inc and...

you are considering a stock investment in one of two firms( lots of debt inc and lots of equity inc.) both of which operate in the same industry. lots of debt, inc finances its 35.25 million in assets with 35.75 million in debt and 2.50 million in equity. lots of equity, inc. finances its 35.25 million in assets with 2.50 million in debt and 32.75.
calculate the debt ratio.
calculate the equity mulitplier.
calculate the debt to equity.

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

LOTS OF DEBT INC.

1. Debt ratio = total debt/total assets

= 32.75/35.25

= 0.9291 or 92.91%

2. Equity multiplier = total assets/total shareholders equity

= 35.25/2.5

= 14.1 times

3. Debt to equity ratio = total debt/total shareholders equity

= 32.75/2.5

= 13.1 times

LOTS OF EQUITY INC.

1. Debt ratio = total debt/total assets

= 2.5/35.25

= 0.0709 or 7.09%

2. Equity multiplier = total assets/total shareholders equity

= 35.25/32.75

= 1.0763 times

3. Debt to equity ratio = total debt/total shareholders equity

= 2.5/32.75

= 0.0763 times

0 0
Add a comment
Know the answer?
Add Answer to:
you are considering a stock investment in one of two firms( lots of debt inc and...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc),...

    You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc), both of which operate in the same industry. LotsofDebt, Inc, finances its $3525 million in assets with $3150 million in debt and $3.75 million in equity LotsofEquity, Inc. finances its $35.25 million in assets with $375 million in debt and $3150 million in equity Calculate the debt ratio (Round your answers to 2 decimal places.) Debt ratio LotsofDebt, Inc. LotsofEquity, Inc. Calculate the equity...

  • You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc),...

    You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc), both of which operate in the same industry. LotsofDebt, Inc. finances its $33 50 million in assets with $32.00 million in debt and $1.50 million in equity LotsofEquity, Inc. finances its $33.50 million in assets with $1.50 million in debt and $32.00 million in equity Calculate the debt ratio. (Round your answers to 2 decimal places.) Calculate the debt-to-equity (Round your answers to 2...

  • You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc),...

    You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc), both of which operate in the same industry LotsofDebt, Inc. finances its $30 million in assets with $29 million in debt and $1 million in equity LotsofEquity, Inc. finances its 30 million in assets with $1 million in debt and $29 million in equity Calculate the debt ratio. (Round your answers to 2 decimal places.) Debt ratico LotsofDebt, Inc LotsofEquity. Inc. Calculate the equity...

  • You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc),...

    You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc), both of which operate in the same industry LotsofDebt, Inc. finances its $33 50 million in assets with $32.00 million in debt and $1.50 million in equity. LotsofEquity, Inc. finances its $33.50 million in assets with $1.50 million in debt and $32.00 million in equity Calculate the debt ratio. (Round your answers to 2 decimal places) Debt ratio LotsofDebt, Inc LotsoffE quity, Inc. Calculate...

  • You are considering a stock investment in one of two firms (NoEquity, Inc. and NoDebt, Inc.),...

    You are considering a stock investment in one of two firms (NoEquity, Inc. and NoDebt, Inc.), both of which operate in the same industry and have identical operating income of $11.0 million. NoEquity, Inc. finances its $35 million in assets with $34 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Inc. finances its $35 million in assets with no debt and $35 million in equity. Both firms pay a tax rate...

  • You are considering a stock investment in one of two firms (NoEquity, Inc. and NoDebt, Inc.),...

    You are considering a stock investment in one of two firms (NoEquity, Inc. and NoDebt, Inc.), both of which operate in the same industry and have identical operating income of $7.5 million. NoEquity, Inc. finances its $35 million in assets with $34 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Inc. finances its $35 million in assets with no debt and $35 million in equity. Both firms pay a tax rate...

  • You are considering a stock investment in one of two firms (AllDebt, Inc., and AllEquity, Inc.),...

    You are considering a stock investment in one of two firms (AllDebt, Inc., and AllEquity, Inc.), both of which operate in the same industry and have identical EBITDA of $16.6 million and operating income of $10.0 million. AllDebt, Inc., finances its $25 million in assets with $24 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. AllEquity, Inc., finances its $25 million in assets with no debt and $25 million in equity. Both...

  • You are considering a stock investment in one of two firms (NoEquity, Inc. and NoDebt, Inc.),...

    You are considering a stock investment in one of two firms (NoEquity, Inc. and NoDebt, Inc.), both of which operate in the same industry and have identical operating income of $20.5 million. NoEquity, Inc. finances its $70 million in assets with $69 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Inc. finances its $70 million in assets with no debt and $70 million in equity. Both firms pay a tax rate...

  • You are considering a stock investment in one of two firms (NoEquity, Inc., and NoDebt, Inc.)

    2-19 You are considering a stock investment in one of two firms (NoEquity, Inc., and NoDebt, Inc.), both of which operate in the same industry and have identical operating income of $32.5 million. NoEquity, Inc., finances its $65 million in assets with $64 million in debt (on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Inc., finances its $65 million in assets with no debt and $65 million in equity. Both firms pay a tax...

  • Please show calculations Help roblems You are considering a stock investment in one of two firms...

    Please show calculations Help roblems You are considering a stock investment in one of two firms (NoEquity, Inc. and NoDebt, Inc.), both of which operate in the same industry and have identical operating income of $8.5 milion. NoEquity, Inc. finances its $55 million in assets with $54 million in debt on which it pays 10 percent interest annually) and $1 million in equity. NoDebt, Inc. finances its $55 million in assets with no debt and $55 million in equity. Both...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT