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?

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Definitions:

Somatoform Disorder

A mental disorder characterized by physical symptoms that are not fully explained by a general medical condition, substance use, or another mental disorder.

Neurotic Depression

A mental health condition featuring symptoms of depression that are usually less severe than major depressive disorder but include high levels of anxiety.

Conversion Reaction

A psychological response where emotional stress or conflict is converted into physical symptoms.

Simple Phobias

Excessive and irrational fears of specific objects, activities, or situations, that can lead to severe anxiety when encountered.