Debt To Capital Ratio (EOC Question)

CFA Level I FRA
#1

All,

I couldn’t get this official question from EOC Curriculum:

[question removed by admin]

Official explanation says that current debt to capital ratio = $840/($840+$520) … I didn’t get this calculation. How is this possible? How do we know that all $840 is allocated to bonds or debts? What about other liabilities that are not classified as debt for fund raising such as Account payables? I am a little bit confused with the definition of “Debt” here.

Can someone please help me?

Thanks in advance.

#2

any help please? :frowning: this one is an official question.

#3

Correct answer should be (840+100)/(840+100+520) this is how 0.64 is the result and the question in my view asks you to add the PV of the operating lease pmt to the assets and liabilities.

#4

Obviously, they’re using “debt” in a loose sense here. If they don’t describe any of the liabilities as non-debt, you have to assume that they’re all debt. It’s a frail reed, I grant you, but it’s the only one on which you can lean.