Cooper Inc's latest EPS was $4.00, its book value per share was $20.00, it had 200,000 shares outstanding, and its debt ratio was 40%. How much debt was outstanding?
To calculate the outstanding debt of Cooper Inc, we need to know its total equity. The debt ratio can be used to find the total equity.
The debt ratio is the ratio of total debt to total assets. It represents the proportion of a company's assets that are financed by debt. In this case, the debt ratio is given as 40%.
We can calculate the total assets using the book value per share and the number of shares outstanding. Since the book value per share represents the equity per share, we can multiply it by the number of outstanding shares to get the total equity.
Total equity = Book value per share * Number of shares outstanding
Total equity = $20.00 * 200,000
Total equity = $4,000,000
Now, we can calculate the total debt using the debt ratio and total assets.
Debt ratio = Total debt / Total assets
0.40 = Total debt / $4,000,000
Rearranging the equation:
Total debt = Debt ratio * Total assets
Total debt = 0.40 * $4,000,000
Total debt = $1,600,000
Therefore, the outstanding debt of Cooper Inc is $1,600,000.