Compute the debt to equity ratio at December 31, 2018.

Computing the debt to equity ratio

Ludwig Corporation has the following data as of December 31, 2018:

Total Current Liabilities $ 36,210 Total Stockholders’ Equity $ ?

Total Current Assets 58,200 Other Assets 36,800

Long-term Liabilities 139,630 Property, Plant, and Equipment, Net 206,440

Compute the debt to equity ratio at December 31, 2018.

Solutions

Expert Solution

Step 1: Definition of debt-to-equity ratio

The debt-to-equity ratio is a financial ratio that shows the proportion of debt and the shareholder’s equity.

Step 2: Calculation of the debt-to-equity ratio

Working Notes:

Total Current Assets	$58,200
Other Assets	$36,800
Plant and Equipment	$206,440
Total Assets	$301,440
Less: Current Liabilities	($36,210)
Less: Long-term Liabilities	($139,630)

Total Shareholder’s Equity		$134,600

The debt-to-equity ratio of the company is 1.46

Sahil Dangi answered 1 year ago

Next > < Previous

Related Solutions

Compute Pack Leader Wireless’s debt to equity ratio at December 31, 2018

Definition: Reporting liabilities on the balance sheet and computing debt to equity ratio The accounting records of Pack Leader Wireless include the following as of December 31, 2018: Accounts Payable $ 77,000 Salaries Payable $ 7,500 Mortgages Payable (long-term) 73,000 Bonds Payable (current portion) 25,000 Interest Payable 18,000 Premium on Bonds Payable 10,000 Bonds Payable (long-term) 63,000 Unearned Revenue (short-term) 2,700 Total Stockholders’ Equity 140,000 Requirements 2. Compute Pack Leader Wireless’s debt to equity ratio at December 31, 2018.

For each year (2019 and 2018) compute Times interest earned Debt ratio Debt/equity ratio Debt to...

For each year (2019 and 2018) compute Times interest earned Debt ratio Debt/equity ratio Debt to tangible net worth ratio Balance Sheet (in thousands) 2019 2018 Current assets $ 449,195 $ 433,049 Investments 32,822 55,072 Deferred charges 4,905 12,769 Property, plant, and equipment, net 350,921 403,128 Trademarks and leaseholds 45,031 47,004 Excess of cost over fair market value of net assets acquired 272,146 276,639 Assets held for disposal 6,062 10,247 $1,161,082 $1,237,908 Total liabilities $ 689,535 $ 721,149 Total stockholders' equity 471,547 516,759 $1,161,082...

Computing the debt to equity ratio

Question: Computing the debt to equity ratio Jackson Corporation has the following amounts as of December 31, 2018. Total assets $ 55,250 Total liabilities 22,750 Total equity 32,500 Compute the debt to equity ratio on December 31, 2018.

The company currently has a target debt–equity ratio of .45, but the industry target debt–equity ratio...

The company currently has a target debt–equity ratio of .45, but the industry target debt–equity ratio is .40. The industry average beta is 1.20. The market risk premium is 8 percent, and the risk-free rate is 6 percent. Assume all companies in this industry can issue debt at the risk-free rate. The corporate tax rate is 40 percent. The project requires an initial outlay of $680,000 and is expected to result in a $100,000 cash inflow at the end of...

What is the debt to equity ratio for 2017?

Use the following information to answer this question. Thomas Company 2017 Income Statement ($ in millions) Net sales $ 9,530 Cost of goods sold 7,760 Depreciation 465 Earnings before interest and taxes $ 1,305 Interest paid 104 Taxable income $ 1,201 Taxes 420 Net income $ 781 Thomas Company 2016 and 2017 Balance Sheets ($ in millions) 2016 2017 2016 2017 Cash $ 230 $ 260 Accounts payable $ 1,370 $ 1,385 Accounts rec. 1,000 900 Long-term debt 1,100 1,300...

This is the stockholders equity section of Leveon James and co. at December 31, 2018: 31-Dec-18...

This is the stockholders equity section of Leveon James and co. at December 31, 2018: 31-Dec-18 31-Dec-19 Common stock, $10 par value, 1,000,000 shares issued & outstanding 10,000,000 10,000,000 Additional paid-in-capital Common stock 3,000,000 Retained Earnings 8,750,000 $21,750,000 The following transactions occurred in 2019: 1-Feb Declared a cash dividend of $.50 per share to common shareholders of record on February 15th payable on March 1st 1-Mar Paid the dividend declared on February 1st 1-Apr Announced a 5 for 1 common...

Financial Statement Analysis for Eastman Chemical company: for 2017 and 2018 Leverage Ratios Debt-to-Assets Ratio Debt-to-Equity...

Financial Statement Analysis for Eastman Chemical company: for 2017 and 2018 Leverage Ratios Debt-to-Assets Ratio Debt-to-Equity Ratio Interest Coverage

The stockholders' equity section of Benton Corporation's balance sheet as of December 31, 2018 is as...

The stockholders' equity section of Benton Corporation's balance sheet as of December 31, 2018 is as follows: Stockholders' Equity Common stock, $5 par value; authorized, 2,000,000 shares; issued, 400,000 shares $2,000,000 Paid-in capital in excess of par 850,000 Retained earnings 3,000,000 $5,850,000 The following events occurred from January to August during 2019: 1. Jan. 5 10,000 shares of authorized and unissued common stock were sold for $8 per share. 2. Jan. 16 Purchase back 1,000 treasury shares at $10 per...

(a)compute the ratio of liabilities to owner's equity (b) Has the creditor's risk increased or decreased from december 31,2018 to december 31,2019

The following data were taken from mesa company's balance sheet ParticularsDec 31,2019Dec 31,2019Total liabilities 5,47,8005,18,000Total owner's equity4,15,0003,70,000(a) Compute the ratio of liabilities to owner's equity(b) Has the creditor's risk increased or decreased from december 31,2018 to december 31,2019

What is the pretax cost of debt if the debt-equity ratio is 0.88?

Debbie's Cookies has a return on assets of 9.3 percent and a cost of equity of 12.4 percent. What is the pretax cost of debt if the debt-equity ratio is 0.88? Ignore taxes.5.25%6.42%6.68%5.78%6.10%

Subjects