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bagirrra123 [75]
3 years ago
7

Saffron Industries most recent balance sheet reports total assets of $42,000,000, total liabilities of $16,000,000 and stockhold

ers' equity of $26,000,000. Management is considering using $3,000,000 of excess cash to prepay $3,000,000 of outstanding bonds. What effect, if any, would prepaying the bonds have on the company's debt-to-equity ratio
Business
1 answer:
alexandr402 [8]3 years ago
7 0

Answer:

A) Prepaying the debt would cause the firm's debt-to-equity ratio to improve from .62 to .50.

Explanation:

The computation of the impact is as follows:

The Debt equity ratio is

= Total liabilities ÷ total equity

Now

Debt equity prior to payment is

= $16,000,000 ÷ $26,000,000

= 0.62

And,

Debt equity after payment is

= $13,000,000 ÷ $26,000,000

= 0.50

So here as we can see that the debt equity would be improved from 0.62 to 0.50

Therefore the correct option is a.

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Answer:

B) search for solutions that are reasonable

Explanation:

When Emily solves her work problems by satisficing a large number of decisions, it means that she makes the decisions that are barely adequate to solve the issues. She doesn't take the time to make the best possible ones. Since she has a very tight work schedule, she doesn't have the time to search all the necessary information nor to search all the possible options. She doesn't have the time to analyze which alternative is best, she will take whatever option she finds first.

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Answer:

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Explanation:

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In turn, according to the law of demand, the higher the price, the lower the quantity demanded of the product. In other words, this tax increase would produce a drop in the demand for yachts.

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Answer:

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Explanation:

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Explanation:

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