Look at the following company: Monster Beverage Corporation (NasdaqGS:MNST) and suggest a debt-to-capital ratio for it (I CHOSE THE RANGE 10-15%. PLEASE EXPLAIN). You can use information from any sources you want, but provide details on where you get your information.
The 5-year beta of this company is 1.23, according to NetAdvantage. This company has zero debt, which is unusual compared to other comparable firms in the industry. This may or may not be optimal, so you should not try to skew your recommendation toward zero unless you’re able to justify this fully.
Write up 1 PAGE, SINGLED SPACE report about the number III in the table BELOW:
III, EXPECTED BANKRUPTCY COSTS
a. Actual Bankruptcy Costs and Financial Distress Costs
b. Probability of Bankruptcy (Whether the firm’s assets are specialized or not, The ratio of tangible to non-tangible assets,The durable nature of the firm’s goods,How difficult it is for customers to evaluate the quality of the firm’s goods.)
please explain both a) and b) according to the table to lead to the final DEBT-TO-CAPITAL RATIO RANGE THAT I CHOSE, WHICH IS 10-15%