Question
Thrillville has $39.3 million in bonds payable. One of the contractual agreements in the bond is that the debt to equity ratio cannot exceed 2.0.
Thrillville has $39.3 million in bonds payable. One of the contractual agreements in the bond is that the debt to equity ratio cannot exceed 2.0. Thrillvilles total assets are $79.3 million, and its liabilities other than the bonds payable are $9.3 million. The company is considering some additional financing through leasing. 4-a. Will entering into the lease cause the debt to equity ratio to be in violation of the contractual agreement in the bond? multiple choice Yes No 4-b. Determine your answer by calculating the debt to equity ratio after recording the lease.
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