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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.

Solution provided by:
Manal Elkhoshkhany, MBA
Education
  • BA, Ain Shams University, Cairo Egypt
  • MBA, California State University, Sacramento
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