KMS corporation has assets of $650 million, $65 million of which are cash. It has debt of $216.7 million. If KMS repurchases $21.7 million of its stock:a. What changes will occur on its balance sheet?b. What will be its new leverage ratio?a. What changes will occur on its balance sheet? (Select the best choice below.)A. Both the cash balance and shareholder equity will drop by $21.7 million.B. Both the cash balance and shareholder equity will increase by $21.7 million.C. Both accounts receivable and shareholder equity will drop by $21.7 million.D. Debt will increase by $21.7 million and shareholder equity will decrease by $21.7 million.b. What will be its new leverage ratio?The new leverage ratio after the repurchase is%. (Round to one decimal place.)

A Leverage ratio is a ratio which shows how much capital is in the form of Debt.

KMS corporation has assets of $650 million, $65 million of which are cash. It has debt of $216.7 million. If KMS repurchases $21.7 million of its stock: a. What changes will occur on its balance sheet? b. What will be its new leverage ratio? a. What changes will occur on its balance sheet? (Select the best choice below.) O A. Both the cash balance and shareholder equity will drop by $21.7 million. O B. Both the cash balance and shareholder equity will increase by $21.7 million. C. Both accounts receivable and shareholder equity will drop by $21.7 million. O D. Debt will increase by $21.7 million and shareholder equity will decrease by $21.7 million. b. What will be its new leverage ratio? The new leverage ratio after the repurchase is %. (Round to one decimal place.)

KMS corporation has assets of $650 million, $65 million of which are cash. It has debt of $216.7 million. If KMS repurchases $21.7 million of its stock: a. What changes will occur on its balance sheet? b. What will be its new leverage ratio? a. What changes will occur on its balance sheet? (Select the best choice below.) O A. Both the cash balance and shareholder equity will drop by $21.7 million. O B. Both the cash balance and shareholder equity will increase by $21.7 million. C. Both accounts receivable and shareholder equity will drop by $21.7 million. O D. Debt will increase by $21.7 million and shareholder equity will decrease by $21.7 million. b. What will be its new leverage ratio? The new leverage ratio after the repurchase is %. (Round to one decimal place.)

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

Problem 1PS

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