Corporate Finance Assignment/ Professional Essay Writers
1. The current sheet of Apex reports total assets of $20million, total liabilities of $2 million, and owner’s equity of $18million. Apex is considering several; financing possibilities in order to expand operations. Each question based on this data is independent of any others. What will be the effect on Apex’s debt ratio if Apex’s owner invests an additional $2 million to finance its expansion?
a. Additional investment by the owner will have no effect on the debt ratio.
b. The debt ratio will increase from 20 before to 22 after the additional investment.
c. The debt ratio will decrease from 2/9 before 2/11 after the additional investment.
d. The debt ratio will decrease from .1 (2/20) to .0909 (2/22)after the additional investment. Get Finance Help Today