Question on debt ratio, The Altman Corporation has a debt

Question on debt ratio

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Reference no: EM1366478

The Altman Corporation has a debt ratio of 33.33%, and it requires to increase $100,000 to expand. Management feels that an optimal debt ratio would be 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. 100% equity
b. 100% debt
c. 20 percent debt, 80 percent equity
d. 40 percent debt, 60 percent equity
e. 50 percent debt, 50 percent equity

Reference no: EM1366478

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