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

question 46

Essay

A company had a debt-to-equity ratio of 1.64 before issuing convertible bonds. This ratio included $500,000 in equity. The company issued convertible bonds. The value reported for the bonds on the balance sheet is $180,000 and the conversion rights are valued at $22,000.
Required:
After the issuance of the convertible bonds, what is the value of the debt-to-equity ratio?

---

Definitions:

PTO Mode

Power Take-Off mode, which diverts power from the vehicle's engine to operate external equipment or machinery.

Allison Hydromechanical Transmission

A type of transmission combining hydraulic and mechanical elements, often found in heavy vehicles, offering smooth power delivery.

Torque Converter Turbine

A component in automatic transmissions that uses fluid dynamics to transfer rotational power from the engine to the transmission.

Planetary Carrier Assembly

A component of a planetary gear system that holds one or more gears in place, allowing them to orbit a central gear for speed or torque adjustment.