Coney Island enters into a lease agreement for a new ride valued at $3.8 million
ID: 2466768 • Letter: C
Question
Coney Island enters into a lease agreement for a new ride valued at $3.8 million. Prior to this agreement, the company’s total assets are $30.4 million and its total liabilities are $16.8 million.
Required:
1.
Calculate total stockholders’ equity prior to the lease agreement. (Enter your answer in millions not in dollars.)
Stockholders' equity__________ {millions}
2&3) Calculate the debt to equity ratio. (Round your answers to 2 decimal places.)
Debit to equity ratio:
Operating Lease-
Capital Lease-
Coney Island enters into a lease agreement for a new ride valued at $3.8 million. Prior to this agreement, the company’s total assets are $30.4 million and its total liabilities are $16.8 million.
Explanation / Answer
Given that Lease value = $3.8 million,
Total Assets = $30.4 million and
Total liabilities = $16.8 million
Stockholders equity = $30.4 million - $16.8 million
Stockholders equity = $13.6 million
2. Debt-equity ratio = Total liabilities/Stockholders equity
Debt-equity ratio = $16.8million/$13.6 million
Debt-equity ratio = 1.24
3. Debt-equity ratio = Total liabilities/Stockholders equity
Debt-equity ratio = ($16.8million + $3.8 million)/$13.6 million
Debt-equity ratio = 1.51