During 2015, The Mann Corporation borrowed $500,000 from TheBiltmore National Bank. The loan agreement included a debt covenantrestricting the companyâs level of debt relative to shareholdersâequity. The covenant specified that Mannâs long-term debt toshareholdersâ equity ratio could not exceed 1-to-1 at any timeduring the loan period. The Mann Corporationâs 2015 year-endbalance sheet appeared as follows:
2015 Total assets $ 2,001,600 Current liabilities $ 542,100 Long-term debt 625,500 Shareholders' equity 834,000 $ 2,001,600
Calculate The Mann Corporationâs long-term debt to shareholdersâequity ratio at year-end 2015.
Round answer to two decimal places. Answer
What is the companyâs maximum borrowing capability at year-end 2015without violating the long-term debt to shareholdersâ equitycovenant of the existing loan agreement? $Answer
What is the maximum dividend that the company can pay at year-endwithout violating the debt covenant? $Answer
If the company pays a cash dividend of $100,000 at year-end 2015,what is the companyâs maximum borrowing capability withoutviolating the debt covenant? $Answer
During 2015, The Mann Corporation borrowed $500,000 from TheBiltmore National Bank. The loan agreement included a debt covenantrestricting the companyâs level of debt relative to shareholdersâequity. The covenant specified that Mannâs long-term debt toshareholdersâ equity ratio could not exceed 1-to-1 at any timeduring the loan period. The Mann Corporationâs 2015 year-endbalance sheet appeared as follows:
2015 | ||
---|---|---|
Total assets | $ 2,001,600 | |
Current liabilities | $ 542,100 | |
Long-term debt | 625,500 | |
Shareholders' equity | 834,000 | |
$ 2,001,600 |
Calculate The Mann Corporationâs long-term debt to shareholdersâequity ratio at year-end 2015.
Round answer to two decimal places. Answer
What is the companyâs maximum borrowing capability at year-end 2015without violating the long-term debt to shareholdersâ equitycovenant of the existing loan agreement? $Answer
What is the maximum dividend that the company can pay at year-endwithout violating the debt covenant? $Answer
If the company pays a cash dividend of $100,000 at year-end 2015,what is the companyâs maximum borrowing capability withoutviolating the debt covenant? $Answer