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What is Suncoasts current debt ratio

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Reference no: EM133109833

Question - Suncoast Healthcare is planning to acquire a new X-ray machine that costs $200,000. The business can either lease the machine using an operating lease or buy it using a loan from a local bank. Suncoast's balance sheet prior to acquiring the machine is as follows:

Current assets $100,000 Debt $400,000

Net fixed assets $900,000 Equity $600,000

Total assets $1,000,000 Total claims $1,000,000

Required -

a. What is Suncoast's current debt ratio?

b. What would the new debt ratio be if the machine were leased using an operating lease?

c. Is the financial risk of the business different under the two acquisition alternatives - Lease v. Purchase?

Reference no: EM133109833

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