Debt/Equity Ratio. The present capital structure of Jones Corporation is shown

Debt/Equity Ratio. The present capital structure of Jones Corporation is shown below.

Debentures

$1200000

Collateral bonds

2800000

Preferred stock

700000

Common stock

2600000

Total

$7300000

There is a high financial leverage position:

Debt/Equity=$4000000/$3300000=1.21

The business is worth $4.7 million as a going concern. The trustee has formulated a less leveraged capital structure having a total capital of $4.7 million
as follows:

Debentures

$ 800000

Collateral bonds

1500000

Income bonds

1300000

Preferred stock

400000

Common stock

700000

Total

$4700000

What is the new debt/equity ratio?