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GenCorp. has a total debt of $140 million and stockholders' equity of $50 million. It also...

GenCorp. has a total debt of $140 million and stockholders' equity of $50 million. It also has 26 million shares outstanding, with a market price of $4.00 per share. What is GenCorp's market debt-equity ratio?

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Answer #1

GenCorp's market debt-equity ratio

Market debt-equity ratio = Market Value of Debt / Market Value of Equity

= $140 Million / [26 Million shares outstanding x $4.00 per share]

= $140 Million / $104 Million

= 1.35

“Hence, GenCorp's market debt-equity ratio will be 1.35”

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