P15-3 (similar to) Question Help (Related to Checkpoint 15.1) (Calculating capital structure weights) Winchell Investment Advisors is evaluating the capital structure of Ojai Foods. Ojai's balance sheet indicates that the firm has $48.24 million in total liabilities. Ojai has only $38.66 million in short- and long-term debt on its balance sheet. However, because interest rates have fallen dramatically since the debt was issued, Ojai's short- and long-term debt has a current market price that is 10 percent over its book value or $42.53 million. The book value of Ojai's common equity is $50.89 million but the market value of the equity is currently $99.43 million. a. What is Ojai's debt ratio and interest-bearing debt ratio calculated using book values? b. What is Ojai's debt-to-enterprise-value ratio calculated using the market values of the firm's debt and equity and assuming excess cash is zero? If you were trying to describe Ojai's capital structure to a potential lender (i.e., a bank), would you use the book-value-based debt ratio or the market value-based debt-to-enterprise-value ratio? C. a. Ojai's debt ratio calculated using book values is %. (Round to one decimal place.) P15-3 (similar to) Question Help (Related to Checkpoint 15.1) (Calculating capital structure weights) Winchell Investment Advisors is evaluating the capital structure of Ojai Foods. Ojai's balance sheet indicates that the firm has $48.24 million in total liabilities. Ojai has only $38.66 million in short- and long-term debt on its balance sheet. However, because interest rates have fallen dramatically since the debt was issued, Ojai's short- and long-term debt has a current market price that is 10 percent over its book value or $42.53 million. The book value of Ojai's common equity is $50.89 million but the market value of the equity is currently $99.43 million. a. What is Ojai's debt ratio and interest-bearing debt ratio calculated using book values? b. What is Ojai's debt-to-enterprise-value ratio calculated using the market values of the firm's debt and equity and assuming excess cash is zero? If you were trying to describe Ojai's capital structure to a potential lender (i.e., a bank), would you use the book-value-based debt ratio or the market value-based debt-to-enterprise-value ratio? C. a. Ojai's debt ratio calculated using book values is %. (Round to one decimal place.)