Ask Question
11 January, 06:42

g Kaye's Kitchenware has a market/book ratio equal to 1. Its stock price is $12 per share and it has 5.2 million shares outstanding. The firm's total capital is $120 million and it finances with only debt and common equity. What is its debt-to-capital ratio? Round your answer to two decimal places.

+2
Answers (1)
  1. 11 January, 07:30
    0
    48.00%

    Explanation:

    For computing the debt to capital ratio, first we have to determine the equity value and debt value which is shown below:

    Equity value = Number of outstanding shares * stock price per share

    = 5.2 million shares * $12

    = $62.4 million

    We know,

    Total capital = Debt + equity

    $120 million = Debt + $62.4 million

    So, the debt would be

    = $120 million - $62.4 million

    = $57.6 million

    Now the debt to capital ratio would be

    = $57.6 million : $120 million

    = 48.00%
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “g Kaye's Kitchenware has a market/book ratio equal to 1. Its stock price is $12 per share and it has 5.2 million shares outstanding. The ...” 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