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Refer to the balance sheet above. If in 2006 Luther has 10.2 million shares outstanding and these shares are trading at $16 per share, then using the market value of equity, the debt-equity ratio for Luther in 2006 is closest to

Answer :

ZVIKOGO

Answer:

176 %

Explanation:

Note : The full question is attached below

The debt-equity ratio is part of the Debt Management Ratios. It shows how much foreign money is used by the company.

Debt-equity ratio = Total Debt / Total Equity × 100

Where

Total Debt = Short term debt + Current maturities of long term debt + Long term debt

                 = 9.3 million + 38.8  million + 239.1  million

                 = $287,200,000

Total Equity = Shares outstanding × Market Value

                    =  10,200,000 × $16

                    = $163,200,000

Therefore,

Debt-equity ratio = 176 %

The debt-equity ratio for Luther in 2006 is closest to 176 %

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