Curley's Fried Chicken Kitchen operates two southern cooking restaurants in St. Louis, Missouri, and has the followwing financial structure: Accounts payable $118,000 Short-term debt 390,000 Current liabilities $508,000 Long-term debt 2,158,000 Owner's equity 1,594,000 $4,260,000 Total The firm is considering an expansion that would involve raising an additional $2.3 million. a. What are the firm's debt ratio and interest-bearing debt ratio in its present capital structure? b. If the firm wants to have a debt ratio of 50 percent, how much equity does the firm need to raise in order to finance the expansion?
Curley's Fried Chicken Kitchen operates two southern cooking restaurants in St. Louis, Missouri, and has the followwing financial structure: Accounts payable $118,000 Short-term debt 390,000 Current liabilities $508,000 Long-term debt 2,158,000 Owner's equity 1,594,000 $4,260,000 Total The firm is considering an expansion that would involve raising an additional $2.3 million. a. What are the firm's debt ratio and interest-bearing debt ratio in its present capital structure? b. If the firm wants to have a debt ratio of 50 percent, how much equity does the firm need to raise in order to finance the expansion?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Curley's Fried Chicken Kitchen operates two southern cooking
restaurants in St. Louis, Missouri, and has the followwing financial
structure:
Accounts payable $118,000
Short-term debt 390,000
Current liabilities $508,000
Long-term debt 2,158,000
Owner's equity
1,594,000
$4,260,000
Total
The firm is considering an expansion that would involve raising an
additional $2.3 million.
a. What are the firm's debt ratio and interest-bearing debt ratio in
its present capital structure?
b. If the firm wants to have a debt ratio of 50 percent, how much
equity does the firm need to raise in order to finance the
expansion?
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