In: Finance
Meyer Inc’s total invested capital is $676,000, and its total debt outstanding is $185,000. The new CFO wants to establish a total debt to total capital ratio of 25%. The size of the firm will not change.
How much debt must the company add or subtract to achieve the target debt to capital ratio?
The company must subtract $16,000 to achive the target debt to capital ratio.
Total Debt outstanding must be $169,000 .