Ask Question
BusinessBusiness
10 August, 10:23

Bostian, Inc. has total assets of $575,000. 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? Select the correct answer. a. $131,118 b. $131,250 c. $131,382 d. $131,316

+4
Answers (1)
  1. 10 August, 12:51
    0
    The company must add debt for an amount of $131,250.

    Explanation:

    The formula to calculate the debt-to-assets ratio is:

    Debt-to-assets ratio = Total Liabilities/Total Assets

    The company's debt-to-assets ratio is:

    Debt-to-assets ratio = $185,000/$575,000

    Debt-to-assets ratio = 0,32*100 = 32%

    Then, to determine the total liabilities necessary to have a debt-to-assets ratio of 55%:

    Total liabilities = Debt-to-assets ratio*Total Assets

    Total liabilities = 0,55*$575,000

    Total liabilities = $316,250

    $316,250-$185,000 = $131,250

    To have a debt-to-assets ratio of 55%, the company must add debt for an amount of $131,250.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Bostian, Inc. has total assets of $575,000. Its total debt outstanding is $185,000. The Board of Directors has directed the CFO to move ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Which of the following best describes the simple spending multiplier? Select one: a. It shows the magnified change in planned aggregate spending that arises from a change in equilibrium output. b.
Answers (1)
27. ___ is a method for developing the shortest schedule when the number or amount of available resources is fixed. a. Resource evaluation scheduling b. Resource monitoring c. Resource limited scheduling d. Resource leveling
Answers (1)
Which of the following is a guideline for managers to evaluate employees?
Answers (1)
A bottleneck is: A. negative externality resulting from congestion beyond the infrastructure capacity. B. negative externality resulting from indirect network externalities. C. positive externality resulting from network complementarities. D.
Answers (1)
Kyle Burroughs has decided to put $25 more per week in his savings account. He knows this will reduce his ability to go out to eat each week but thinks building his savings is important. This would be an example of: A) a budget variance.
Answers (1)
New Questions in Business
Gatlin Manufacturing adds direct materials at the beginning of the production process, while conversion costs are incurred uniformly throughout the process.
Answers (1)
If the average cost of transporting a passenger on the train from Chicago to St. Louis is $75, it would be irrational for the railroad to allow any passenger to ride for less than $75. True/False
Answers (1)
Beasley, Inc., reports the following amounts in its December 31, 2021, income statement. Sales revenue $ 350,000 Income tax expense $ 36,000 Interest expense 13,000 Cost of goods sold 120,000 Salaries expense 35,000 Advertising expense 25,000
Answers (1)
Minimum wage laws have the smallest effect on which segment of the labor force? a. low-skilled labor b. teenagers c. skilled workers d. unemployed workers
Answers (1)
A retailer buys a painting for $200. she sets the selling price at $450. when the painting doesn't sell after two months, she raises the price to $800 to appeal to a different market. the painting sells for $800 the next day.
Answers (1)
Home » Business » Bostian, Inc. has total assets of $575,000. 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%.
Sign Up Forgot Password?