Gerrard Construction Co. is an excavation contractor. The following summarized data (in thousands) are taken from the December 31, 2016, financial statements:

For the Year Ended December 31, 2016:
Net revenues	$	32,000
Cost of services provided		11,100
Depreciation expense		5,000
Operating income	$	15,900
Interest expense		3,300
Income tax expense		4,000
Net income	$	8,600
At December 31, 2016:
Assets
Cash and short-term investments	$	3,300
Accounts receivable, net		10,300
Property, plant, and equipment, net		80,400
Total assets	$	94,000
Liabilities and Stockholders' Equity
Accounts payable	$	1,400
Income taxes payable		1,500
Notes payable (long term)		52,200
Paid-in capital		9,000
Retained earnings		29,900
Total liabilities and stockholders' equity	$	94,000

At December 31, 2015, total assets were $81,900 and total stockholders' equity was $31,600. There were no changes in notes payable or paid-in capital during 2016.

d. Calculate the following financial leverage measures for Gerrard Construction Co. at December 31, 2016:

1. Calculate the debt ratio. (Enter your answer as a percentage rounded to 1 decimal place (i.e., 32.1).)

2. Calculate the Debt/equity ratio. (Enter your answer as a percentage rounded to 1 decimal place (i.e., 32.1).)

e. Gerrard Construction Co. wishes to lease some new earthmoving equipment from Caterpillar on a long-term basis. What impact (increase, decrease, or no effect) would a capital lease of $4.1 million have on the company's debt ratio and debt/equity ratio?

A	Increase
B	Decrease
C	No effect