how to do a-2

Clayton Industries has the following account balances: $ Current assets Noncurrent asseta $22.000 78,000 Current liabilities Noncurrent liabilities Stockholders' equity 9,000 43.000 48,000 The company wishes to raise $38,000 in cash and is considering two financing options: Clayton can sell $38,000 of bonds payable, or it can issue additional common stock for $38,000. To help in the decision process, Clayton's management wants to determine the effects of each alternative on its current ratio and debt-to-assets ratio. Required 0-1. Compute the current ratio for Clayton's management. (Round your answers to 2 decimal places.) Current Ratio Currently if bonds are issued If stock is issued 67 to 1 a-2. Compute the debt-to-assets ratio for Clayton's management (Round your answers to 1 decimal place.) Debt to Assets Ratio Currently If bonds are issued If stock is issued b. Assume that after the funds are invested, EBIT amounts to $12,100. Also assume the company pays $3,400 in dividends or $3,400 in interest depending on which source of financing is used. Based on a 30 percent tax rate, determine the amount of the increase in retained earnings that would result under each financing option Bonds Stock 5 Additional Retained Earnings $ 6,090 5 .070