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Anon25 [30]
3 years ago
12

Company X purchased Company Y using financing as follows: $18 million from mortgages, $3 million from retained earnings, $13 mil

lion from cash on hand, and $35 million from bonds. Determine the debt-to-equity mix.
Business
1 answer:
ASHA 777 [7]3 years ago
3 0

Answer:

The debt to equity mix = 74.65% - 25.35%

Explanation:

The computation of the debt to equity mix is shown below:

Debt is

= Mortgages + Bond

= $18 + $35

= $53 million

And, the Equity is

= Retained earnings + Cash in hand

= $5 + $13

= $18 million

Now

Percentage of debt financing

= $53 ÷  ($53 + $18)

= 74.65%

And, percentage of equity financing is

= $18 ÷ ($53 + $18)

= 25.35%

And, finally

The debt to equity mix = 74.65% - 25.35%

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