Nikul Here is a simplified balance sheet for Epicure Pizza (figures in $ millions):AssetsCurrent assets$ 96Liabilities and Shareholders' EquityCurrent liabilities$ 100Fixed assets53Long term debt19Total$ 149EquityTotal30$ 149Note: There are 15 million shares outstanding.Epicure shares are currently priced at $10 each.a. What value should be used for debt when calculating the firm's WACC?Note: Enter your answer in millions.b. Since Epicure issued its debt, interest rates have fallen substantially. Do you need to revise your measure of the debt ratioupward or downward?a. Debt figureb. Do you need to revise your measure of the debt ratio upward or downward?million

Step 1: Determine the total amount of debt.In the balance sheet provided, the current liabilities…

Answered: Here is a simplified balance sheet for…

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 49E

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Capital Structure. Here is a simplified balance sheet for Epicure Pizza (figures in $ millions): Assets Liabilities and Shareholders’ Equity Current assets $80 Current liabilities $60 Fixed assets 125 Long-term debt 65 Equity 80 Total $205 Total $205 Note: There are 16 million shares outstanding.Epicure shares are currently priced at $12 each. (LO13-3) You wish to calculate Epicure’s WACC. What is the relevant figure for the company’s debt ratio? You now realize that since Epicure issued its debt, interest rates have fallen substantially. Do you need to revise your measure of the debt ratio upward or downward?
Klynveld Companys balance sheet shows total liabilities of 94,000,000, total stockholders equity of 75,000,000, and total assets of 169,000,000. Required: Note: Round answers to two decimal places. 1. Calculate the debt ratio. 2. Calculate the debt-to-equity ratio.
Ernst Companys balance sheet shows total liabilities of 32,500,000, total stockholders equity of 8,125,000, and total assets of 40,625,000. Required: Note: Round answers to two decimal places. 1. Calculate the debt ratio. 2. Calculate the debt-to-equity ratio.
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