Compute webb debt ratio and interest-bearing debt ratio

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Reference no: EM131583315

(Calculating debt ratio) Webb Solutions, Inc. has the following financial structure:

Accounts payable $502,000

Short-term debt $252,000

Current liabilities $754,000

Long-term debt $730,000

Shareholders' equity $501,000

Total $1,985,000

a. Compute Webb's debt ratio and interest-bearing debt ratio. (round to one decimal place)

b. If the market value of Webb's equity is $2,000,000 and the value of the firm's debt is equal to its book value, assuming excess cash is zero, what is the debt-to-enterprise-value ratio for Webb?

c. If you were a bank loan officer who was analyzing whether or not to loan more money to Webb, which of the ratios calculated in parts a and b is most relevant to your analysis?

Reference no: EM131583315

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