Tissues and Co has elected to issue preference shares to the value of $220 000.Prior to the share issue the company has assets of $780 000,liabilities of $370 000 and equity recorded at $410 000.The terms of the share issue state that these shares are non-redeemable but a guaranteed cumulative dividend of 8% of share value is payable.Calculate the debt-to-asset ratio immediately before and after the share issue.
A) before-47.4%; after - 47.4%
B) before-47.4%; after - 37%
C) before-52.6%; after - 63%
D) before-47.4%; after - 59%

Question

Quizplus · Accepted Answer

The Answer of Tissues and Co has elected to issue preference shares to the value of $220 000.Prior to the share issue the company has assets of $780 000,liabilities of $370 000 and equity recorded at $410 000.The terms of the share issue state that these shares are non-redeemable but a guaranteed cumulative dividend of 8% of share value is payable.Calculate the debt-to-asset ratio immediately before and after the share issue.
A) before-47.4%; after - 47.4%
B) before-47.4%; after - 37%
C) before-52.6%; after - 63%
D) before-47.4%; after - 59%

Tissues and Co Has Elected to Issue Preference Shares to the Value