Question
Chunky Cheese Pizza has $61.6 million in bonds payable. The bond indenture states that the debt to equity ratio cannot exceed 3.19. Chunkys total assets
Chunky Cheese Pizza has $61.6 million in bonds payable. The bond indenture states that the debt to equity ratio cannot exceed 3.19. Chunkys total assets are $201.6 million, and its liabilities other than the bonds payable are $91.6 million. The company is considering some additional financing through leasing.
1. Calculate total stockholders equity using the balance sheet equation. (Enter your answers in millions rounded to 1 decimal place. (i.e., $5,500,000 should be entered as 5.5).)
Is thae answer should be 48.4 ?
2. Calculate the debt to equity ratio. (Enter your answers in millions rounded to 1 decimal place. (i.e., $5,500,000 should be entered as 5.5). Round ratio answer to 2 decimal place.)
Is the answer should be 3.17 ?
4. The company enters a lease agreement requiring lease payments with a present value of $6.6 million. Will this lease agreement affect the debt to equity ratio differently if the lease is recorded as an operating lease versus a capital lease?
Is the answer should be No?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started