General accounting Apex Innovations has assets with a market value of$750 million, of which $120 million is cash. Thecompany has debt with a market value of $280 millionand 40 million shares outstanding. Assuming perfectcapital markets, if the company distributes the $120million in cash as a dividend, calculate its debt-to-equity ratio after the dividend payment.

Step 1: Define Debt-to-Equity RatioThe Debt-to-Equity Ratio (D/E Ratio) measures a company's…

Answered: Apex Innovations has assets with a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 8P

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XYZ Corp. has assets with a market value of $500 million, including $80 million in cash. The company has debt outstanding with a market value of $200 million and 25 million shares outstanding. Assuming perfect capital markets, if the company distributes the $80 million in cash as a dividend, what will its debt-to-equity ratio be after the dividend payment?
The debt-to-equity ratio after the dividend payment
The debt-to-equity ratio after the dividend payment account
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