Problem:
ABC Corporation has earnings per share of $4 dollar last year and it paid a $2 dividend. Total retained earnings increased by $12 million dollar during the year, and book value per share at year-end were $40. ABC Corporation has no preferred stock, and no new common stock was issued during the year.
Required:
Question: If ABC Corporation year-end debt (which equals to total liabilities) was 120 million. what was the company`s yearend debt/asset ratio?
Note: Explain all calculation and formulas.