PROBLEM
1.Respond to the following:
Required:
a.Define the term "Capital Structure."
b.List five different decisions that management might make that would result in a change in the firm's capital structure. For each decision, explain how the firm's capital structure would change.
2.Selected financial information for Gutierrez Co. appears below:
200920082007
Total assets$1,750$1,875$1,925
Total liabilities1,0001,5001,700
Net income300250100
Dividends1205010
Required:
a.Calculate the debt to equity ratio for each year.
b.Calculate the dividend payout ratio for each year.
c.Comment on the future prospects of Gutierrez Co.