The liabilities and owners\' equity for Campbell Industries is found here: LOADI

Question

The liabilities and owners' equity for Campbell Industries is found here: LOADING... . a.What percentage of the firm's assets does the firm finance using debt (liabilities)? b.If Campbell were to purchase a new warehouse for $ 1.3$1.3 million and finance it entirely with long-term debt, what would be the firm's new debt ratio? a.What percentage of the firm's assets does the firm finance using debt (liabilities)? The fraction of the firm's assets that the firm finances using debt is nothing%. (Round to one decimal place.)

Explanation / Answer

Answer A:-

Debt ratio = Total Liabilities / Total Assets

= (782,000 + 1,127,000) / 6,848,000

= 27.9%

Answer B:-

Debt ratio = Total Liabilities / Total Assets

= (782,000 + 1,127,000 + 1,300,000) / (6,848,000 + 1,300,000)

= 39.4%

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