A retail company that leases the majority of its s
A retail company that leases the majority of its space has total assets of $4,500 million and total long-term debt of $2,125 million bearing an average interest rate of 10%.
Note 8: Operating leases
After adjustment for the off-balance-sheet financing, the debt-to-total-assets ratio for the company is closest to:
A. 58%.
B. 62%.
C. 72%.
参考解答
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2024-10-27 11:23:55
Ans:A.
The present value of the operating leases should be added to both the total debt and the total assets. To estimate the present value it is appropriate to estimate the number of years of lease payments reflected in the 2016 and thereagter figure. Based on the constant expense shown in the first 5 years, there are 9 (1,260/140) more payment for total of 14 payments.
Adjusted debt to total assets
= (2,125+1,134)/(4,500+1,134)=57.8%
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