Question

Conroy Copper Mines has $940 million in total liabilities and $620 million in shareholder's equity. It discloses operating lease commitments over the next five years with a present value of $120 million. If the lease commitments are treated as debt, the debt-to-total-capital ratio is closest to:

Answer 1

0.63

Step-by-step explanation:

Total debt = 940 + 120 =1060

Total sharesholder's equity = $620 million

We can find the debt to total capital ratio by dividing debt by total capital

Debt-to-total-capital ratio = Debt / Total capital = 1060 / (1060+620)

Debt-to-total-capital ratio = 0.63