A Company Had a Debt-To-Equity Ratio of 1

Question 64

A company had a debt-to-equity ratio of 1.65 before issuing convertible bonds.This ratio included $450,000 in equity.The company issued convertible bonds.The value reported for the bonds on the balance sheet is $200,000 and the conversion rights are valued at $25,000. Required: After the issuance of the convertible bonds,what is the value of the debt-to-equity ratio?