Problem:
Omnicorp has a Debt to Equity ratio of 2, a Fixed Asset Turnover ratio of 3.78, and a cash coverage ratio of 1.63. The company plans to purchase $5,000,000 in new assets this year. Please show formulas.
Required:
Question 1: What is Omnicorp's Debt to Asset ratio?
Question 2: How much new debt must Omnicorp use to finance the growth in assets (assuming all financial ratios will remain constant)?
Note: Please show how you came up with the solution.