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    Capital Structure Analysis - Liabilities and Owner's Equity

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    Capital Structure Analysis - the liabilities and owner's equity for Campbell Industries is below.

    Accounts payable: $468,000
    Notes payable: $258,000
    Current liabilities: $726,000
    Long-term debt: $1,101,000
    Common equity: $4,654,000
    Total liabilities and equity: $6,481,000

    a) What percentage of the firm's asset does the firm finance using debt (liabilities)? The fraction of the firm's assets that the firm finances using debt is __% (round to one decimal place).
    b) If Campbell were to purchase a new warehouse for $1.5 million and finance it entirely with long-term debt, what would be the firm's new debt ratio?

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    Solution Summary

    This solution provides a capital structure analysis.