A company needs to raise $10 million to expand its operations It is considering two options (1) Issuing bonds (2) Issuing common stock Currently, the company 's balance sheet shows the following (in millions) Required a Calculate the company 's debt to assets ratio prior to raising the $10 million ...

a 379538 70 the more debt the company has outstanding the riskier its capital structure ...

A company needs to raise $10 million to expand its operations. It is considering two options: (1)

Question:

A company needs to raise $10 million to expand its operations. It is considering two options:
(1) Issuing bonds
(2) Issuing common stock. Currently, the company's shows the following (in millions):

Required
a. Calculate the company's debt to assets ratio prior to raising the $10 million and comment on the riskiness of the company's existing capital structure.
b. Recalculate the company's debt to assets ratio under the two options the company is considering and comment on how this changes the riskiness of the company's capital structure.
c. Can one of the options be considered the "correct" option?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...