Homework Answers
Market/Book Ratio=1
Stock Price =$13 per share
Outstanding shares= 4.8 Million
Total capital = $130 million
Debt to capital ratio is obtained by dividing total debt to total capital.
Debt to capital ratio= Total Debt/ Total capital
Now, Calculating Total debt=(Total capital-(Outstanding shares*Stock Price))=$130 mn-(4.8 mn*$13)=(130-62.4) = $67.6 million
Now putting the value of total debt of $67.6 million in the formula of Debt to Capital ratio,
Debt to capital ratio= Total Debt/ Total capital=$67.6 million/$130 million=0.52
Debt to capital ratio is 0.52 or 52%
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