Answered

Welcome to Westonci.ca, the place where your questions find answers from a community of knowledgeable experts. Get accurate and detailed answers to your questions from a dedicated community of experts on our Q&A platform. Discover in-depth answers to your questions from a wide network of professionals on our user-friendly Q&A platform.

Last year K. Billingsworth & Co. had earnings per share
of $4 and dividends per share of $2. Total retained earnings increased by $12 million
during the year, while book value per share at year-end was $40. Billingsworth has no
preferred stock, and no new common stock was issued during the year. If its year-end
total debt was $120 million, what was the company’s year-end total debt to total capital
ratio?

Sagot :

abiolataiwo2015

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%

Learn more about total debt to total capital ratio here

https://brainly.com/question/17465171

Thank you for visiting our platform. We hope you found the answers you were looking for. Come back anytime you need more information. Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. Get the answers you need at Westonci.ca. Stay informed by returning for our latest expert advice.