Module 6 Question 3  Webb​ Solutions, Inc. has the following financial​ structure:   Accounts payable     $500,000 Short-term debt     $250,000 Current liabilities     $750,000 Long-term debt     $750,000 Shareholders' equity     $500,000 Total     $2,000,000.   a.  Compute​ Webb's debt ratio and​ interest-bearing debt ratio. 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?   a. What is Webb's debt ratio?

RATIO ANALYSIS. Debt Ratio Activity 6 · Understand the information provided by the debt ratio. · Identify the expected range and whether an increasing or decreasing trend is preferred. Purpose: The debt ratio compares total liabilities to total assets. This ratio measures the proportion of assets financed by debt. It is a measure of long-term solvency. Total liabilities DEBT RATI0 = Total assets JOHNSON & CITIGROUP 12/31/99 HEWLETT- PACKARD 10/3 1/99 JOHNSON 1/03/99 WAL-MART 1/31/99 ($ in 000s) Assets $716,937,000 $35,297,000 $26,211,000 $49,996,000 Liabilities 667,251,000 17,002,000 12,621.000 28,884,000 Stockholders' Equity $ 49,686,000 $18,295,000 $13,590,000 $21,112,000 Source: Disclosure, Inc, Compact D/SEC, 2000. 1. For each-company listed above, compute the debt ratio. Record your results below. Debt ratio: 0.93 2. The debt ratios computed above are primarily in the ranġe (less than 0,40 / 0.40 through 0.70 / over 0.70): 3. % of Wal-Mart's assets are financed by debt. 4.…

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