(Answered) Question you have been asked to estimate the debt ratio for

Finance

Question: You have been asked to estimate the debt ratio for a firm, with the following financing details:

• The firm has two classes of shares outstanding; 50,000 shares of class A stock, with 2 voting rights per share, trading at $ 100 per share and 100,000 shares of class B stock, with 1/2 voting right per share, trading at $ 90 per share.

• The firm has $ 5 million in bank debt, and the debt was taken on recently. Estimate the debt ratio. Why does it matter when the bank debt was taken on?

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