Problem Sets - Solutions

Problem Sets - Solutions

B2. Solution: Target of long-term debt / capitalization lies between the range of 40 percent to 45 percent. As the asset size is too small, it cannot be compared at 38 percent. Range of funds from operations/ long-term debt target lies between range of 30 percent to 40 percent, and the range of fixed charges coverage lies between 2.50 to 2.75. as the credit ratings of firm B and E are lower than the desired credit ratings, therefore they should not be used in determining the range. Thus, these targets are most reasonable for the ...