debt ratio in market value terms?

Harish (CS Executive) (386 Points)

02 December 2009  

Simple Ltd. is trying to estimate its debt ratio.  It has 1 million equity shares outstanding, trading at Rs.50 per share.  Simple Ltd. had Rs.250 million in straight debt outstanding (with a market interest rate of 9%).  It has two other securities outstanding.

 

  1. 10000 convertible bonds outstanding with a coupon rate of 6% and 10 years to maturity.
  2. 200000 warrants outstanding, conferring on its holders the right to buy stock in the Simple Ltd. at Rs. 65 per share.  These warrants are trading at Rs. 12 each.

 

You are required to calculate the debt ratio in the market value terms?

 

Please solve the above question with detailed calculations.

 

 

Answer=82.61