Any help solving the following problem is welcomed -- web sites, formulas, etc.


Book Value Balance Sheet (all values in millions)

Assets:

Cash & short term securities  	$1 
Accounts receivable 		$3		 
Inventories 			$7	 
Plants & Equipment - 		$21		 

Total				$32

Liabilities:

Bonds, coupon = 8% paid annually (maturity = 9%)	$10.0
Preferred stock (par value $20 per share)		  2.0
Common stock (par value $.10)				  0.1
Additional paid in stockholders’ capital	          9.9
Retained earnings			        	 10.0

Total						        $32.0


						 

Enter formulas to calculate the capital structure in dollars.			
			
Capital Structure			
	        Dollars	  Percent	
Bonds	        FORMULA	  #DIV/0!	
Preferred Stock	FORMULA	  #DIV/0!	
Common Stock	FORMULA	  #DIV/0!	
Total	$0 	 #DIV/0!

Hi boobee,

Using the balance sheet provided, bonds have value of $10 million and
preferred stock has a value of $2 million.  Common stock is equal to
the sum of the assets minus the liabilities.  In this case, there are
$32 million in assets and $12 million in liabilities (the preferred
stock and the bonds).  Therefore, the common stock has a book value of
$20 million.  Another way to calculate the book value of the common
stock would be to add the par value of the common stock to the
additional paid-in capital and the retained earnings.  This also leads
to a common stock book value of $20 million.  The reason for this is
that common stockholders own all of the assets remaining after the
liabilities are paid.

Therefore, bonds are 31.25%, preferred stock is 6.25%, and common
stock is 62.5% of the total capital structure of $32 million.

Sincerely,

Wonko

Thanks for all your help.