Reynolds Construction needs a piece of equipment that costs $200. Reynolds either can lease the equipment or borrow $200 from a local bank and buy the equipment. If the equipment is leased, the lease would not have to be capitalized. Reynolds’s balance sheet prior to the acquisition of the equipment is as follows: , , , , , ,Current assets $300 Debt $400 ,Net fixed assets $500 Equity $400 ,Total assets $800 Total Claims $800 , ,a. (1) What is Reynolds’s current debt ratio? , , , , , , ,(2) What would be the company’s debt ratio if it purchased the equipment? , , , ,
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