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Fields, Incorporated, has the following book value balance sheet: Total Debt and Equity Assets Current assets $130,000,000 Net fixed assets Total assets 325,000,000 a. Debt-equity ratio b. Debt-equity ratio $455,000,000 Total debt Equity Common stock Capital surplus Accumulated retained earnings Total shareholders' equity Total debt and shareholders' equity $ 220,000,000 $ 40,000,000 75,000,000 120,000,000 times times $ 235,000,000 a. What is the debt-equity ratio based on book values? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) b. Suppose the market value of the company's debt is $221.5 million and the market value of equity is $675 million. What is the debt-equity ratio based on market values? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) $ 455,000,000

Fields, Incorporated, has the following book value balance sheet: Total Debt and Equity Assets Current assets $130,000,000 Net fixed assets Total assets 325,000,000 a. Debt-equity ratio b. Debt-equity ratio $455,000,000 Total debt Equity Common stock Capital surplus Accumulated retained earnings Total shareholders' equity Total debt and shareholders' equity $ 220,000,000 $ 40,000,000 75,000,000 120,000,000 times times $ 235,000,000 a. What is the debt-equity ratio based on book values? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) b. Suppose the market value of the company's debt is $221.5 million and the market value of equity is $675 million. What is the debt-equity ratio based on market values? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) $ 455,000,000

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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**Fields, Incorporated Balance Sheet Overview** Fields, Incorporated presents a book value balance sheet as follows: **Assets:** - **Current Assets:** $130,000,000 - **Net Fixed Assets:** $325,000,000 - **Total Assets:** $455,000,000 **Total Debt and Equity:** - **Total Debt:** $220,000,000 - **Equity:** - Common Stock: $40,000,000 - Capital Surplus: $75,000,000 - Accumulated Retained Earnings: $120,000,000 - **Total Shareholders' Equity:** $235,000,000 - **Total Debt and Shareholders' Equity:** $455,000,000 **Questions:** a. What is the debt-equity ratio based on book values? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) b. Suppose the market value of the company’s debt is $221.5 million and the market value of equity is $675 million. What is the debt-equity ratio based on market values? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) **Answers:** - **a. Debt-equity ratio: ______ times** - **b. Debt-equity ratio: ______ times**
Transcribed Image Text:**Fields, Incorporated Balance Sheet Overview** Fields, Incorporated presents a book value balance sheet as follows: **Assets:** - **Current Assets:** $130,000,000 - **Net Fixed Assets:** $325,000,000 - **Total Assets:** $455,000,000 **Total Debt and Equity:** - **Total Debt:** $220,000,000 - **Equity:** - Common Stock: $40,000,000 - Capital Surplus: $75,000,000 - Accumulated Retained Earnings: $120,000,000 - **Total Shareholders' Equity:** $235,000,000 - **Total Debt and Shareholders' Equity:** $455,000,000 **Questions:** a. What is the debt-equity ratio based on book values? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) b. Suppose the market value of the company’s debt is $221.5 million and the market value of equity is $675 million. What is the debt-equity ratio based on market values? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.) **Answers:** - **a. Debt-equity ratio: ______ times** - **b. Debt-equity ratio: ______ times**
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