Omnicorp debt to asset ratio


Problem:

Omnicorp has a Debt to Equity ratio of 2, a Fixed Asset Turnover ratio of 3.78, and a cash coverage ratio of 1.63. The company plans to purchase $5,000,000 in new assets this year. Please show formulas.

Required:

Question 1: What is Omnicorp's Debt to Asset ratio?

Question 2: How much new debt must Omnicorp use to finance the growth in assets (assuming all financial ratios will remain constant)?

Note: Please show how you came up with the solution.

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Accounting Basics: Omnicorp debt to asset ratio
Reference No:- TGS0890249

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