Questions
a. Compute Webb's debt ratio and interest-bearing debt ratio.
b. If the market value of Webb's equity is $2,063,000 and the value of the firm's debt is equal to its book? value, assuming excess cash is zero, what is the debt-to-enterprise-value ratio for? Webb?
c. If you were a bank loan officer who was analyzing whether or not to loan more money to Webb, which of the ratios calculated in parts a and b is most relevant to your analysis?
1) Webb's debt ratio is %
Accounts payable $522,000
Short-term debt $247,000
Current liabilities $769,000
Long-term debt $741,000
Shareholders' equity $519,000
Total $2,029,000