The following financial information regarding Wick Industries is available:

Wick would like to increase its return to stockholders. To do so, it wants to increase its debt to assets ratio to 0.70 by issuing debt and buying back common stock.
Required
a. Calculate Wick's current debt to equity, debt to assets, and times interest earned ratios.
b. How much debt would Wick have to issue to buy enough common stock to raise its debt to assets ratio to 0.70?
c. What would concern you about Wick's plan?

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Total liabilities Total equity Total assets Income tax expense Net income Operating cash flows Interest expense $150,000 400,000 550,000 20,000 35,000 125,000 15,000