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Sagot :
The company’s year-end total debt to total capital ratio is 33.33%
First step is to calculate the Earning per share
Earning per share = $4 - $2
Earning per share = $2 per share
Second step is to calculate the increase in retained earnings
Increase in retained earnings=$12 million/$2 per share
Increase in retained earnings=6 million shares
Third step is to calculate the Total equity
Total equity=$40 x 6 million
Total equity = $240 million
Fourth step is to calculate the Total Capital
Total Capital=$120 million + $240 million
Total Capita= $360 million
Now let determine the total debt to total capital
ratio
Debt to capital ratio = $120 million/$360 million *100
Debt to capital ratio =33.33%
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