Optimal debt ratio, The Goreman Company has a debt ratio of

Optimal debt ratio

Reference no: EM1355230

The Goreman Corporation has a debt ratio of 33.33%, and it needs to raise $100,000 to expand. Management feels that an optimal debt ratio is 16.67%. Sales are currently $750,000, and the total assets turnover is 7.5. How should the expansion be financed so as to produce the desired debt ratio?
a. Finance it all with debt.
b. Finance it all with equity.
c. Finance 20% with debt and 80% with equity.
d. Finance 40% with debt and 60% with equity.
e. Finance 50% with debt and 50% with equity.

Reference no: EM1355230

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