Bauer Inc. has $2,050 of assets and $2,995 of sales. Its operating costs are $2,

Question

Bauer Inc. has $2,050 of assets and $2,995 of sales. Its operating costs are $2,701, including $31 of lease payments, $450 of depreciation, and $500 of amortization charges. Its total current liabilities are $315, consisting of $265 of accruals and $50 of notes payable. Its long-term debt is $850, and its interest charges are $125. The firm's debt includes all short-term and long-term interest-bearing debt, but it does not include operating items such as accounts payable and accruals. What is Bauer's debt-to-capital ratio?

a. 63.4% b. 65.1% c. 57.0% d. 60.2% e. 50.4%

Explanation / Answer

Bauer Inc details Details Amt $ Total Assets                           2,050 Total Liabilities Current Liabilities                             315 Long term debt                               850 Total Liabilities                           1,165 So Stockholders'Equity=Total Assets-Total Liabilities=                             885 Shortv term debt =Note payable                               50 Total Debt (short term+long term)=                             900 Capital =Debt+Sahreholders'Equity=                         1,785 So Debt tp Capital Ratio=900/1785= 50.4% So correct option is e. 50.4%

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