Question
Suncoast Healthcare is planning to acquire a new x ray machine that costs $200,000. The business can either lease the machine using an operating lease
Suncoast Healthcare is planning to acquire a new x ray machine that costs $200,000. The business can either lease the machine using an operating lease or buy it using a loan from a local bank. Suncoast's balance sheet prior to acquiring the machine is a follows:
Current assets: $100,000 --- debt : $400,000
net fixed assets: $900,00 ---- equity: $ 600,000
total assets : $ 1,000,000 --- total claims: $1,000,000
a. what is Suncoast's current debt ratio?
b. what would the new debt ratio be if the machine were leased? if it iss purchased?
c. is the financial risk of the business different under the two asquistition alternatives?
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