Question
Adjusting a firm's capital structure)Curley's Fried Chicken Kitchen operates two southern cooking restaurants in St. Louis, Missouri, and has the following financial structure: . The
Adjusting a firm's capital structure)Curley's Fried Chicken Kitchen operates two southern cooking restaurants in St. Louis, Missouri, and has the following financial structure: . The firm is considering an expansion that would involve raising an additional
$2.4 million.
Accounts payable | $102,000 |
|
Short-term debt | 407,000 | |
Current liabilities | $509,000 | |
Long-term debt | 2,174,000 | |
Owner's equity | 1,505,000 | |
Total | $4,188,000 |
A.What are the firm's debt ratio and interest-bearing debt ratio in its present capital structure?
b.If the firm wants to have a debt ratio of 50 percent, how much equity does the firm need to raise in order to finance the expansion?
ANSWERS:
A) The firm's debt ratio is _______64.06%. (Round to one decimal place.)
The firm's interest-bearing debt ratio is ________61.63%. (Round to one decimal place.)
B). If the firm wants to have a debt ratio of 50%, the equity the firm needs to raise is $_________-?. (Round to the nearest dollar.)
Please answer the blank above
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