Question

1) What is the measure of indebtedness? Quick ratio Current ratio Times interest earned Debt ratio...

1) What is the measure of indebtedness?

Quick ratio

Current ratio

Times interest earned

Debt ratio

2) Do you want this measure higher or lower?

Higher

Lower

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer 1)

Debt Ratio is the financial ratio which defines what percentage of Debt is used in respect of Total Assets. i.e. How much leverage has been used by the company. Other way to say this is what percentage of Total Assets are financed by Debt.

Option D is correct.

Answer 2)

Lower the Debt proportion in comparison to Total Assets, better it is because Debt increases the risk for the company.

Option B is correct.

NOTE: The answer to your question has been given below/above. If there is any query regarding the answer, please ask in the comment section. If you find the answer helpful, do upvote. Help us help you.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Long-term debt ratio 0.1 Times interest earned 8.0 Current ratio 1.4 Quick ratio 1.0 Cash ratio...
Long-term debt ratio 0.1 Times interest earned 8.0 Current ratio 1.4 Quick ratio 1.0 Cash ratio 0.4 Inventory turnover 4.0 Average collection period 73 days Use the above information from the tables to work out the following missing entries, and then calculate the company’s return on equity. Note: Turnover and the average collection period are calculated using start-of-year, not average, values. (Enter your answers in millions. Round intermediate calculations and final answers to 2 decimal places.) Long-term debt ratio 0.1...
What is one difference between the current ratio and the times interest earned ratio?
What is one difference between the current ratio and the times interest earned ratio?
Out of current ratio quick ratio debt-to-equity ratio rate-earned-on-stockholders'-equity ratio rate-earned-on-total-assets ratio 1. Which ratio is...
Out of current ratio quick ratio debt-to-equity ratio rate-earned-on-stockholders'-equity ratio rate-earned-on-total-assets ratio 1. Which ratio is most important to look at when potentially investing in a company as a stockholder and why? 2. If you are a new supplier, which ratio would you be most interested in to decide to sell your merchandise? Why? Assume your terms for payment are 2/10; net/30. 3. Assume you are a banker and a corporation has met with you to borrow $100,000 and pay...
Out of current ratio, quick ratio, debt-to-equity ratio, rate-earned-on-stockholders'-equity ratio, rate-earned-on-total-assets ratio: 1. Which ratio is...
Out of current ratio, quick ratio, debt-to-equity ratio, rate-earned-on-stockholders'-equity ratio, rate-earned-on-total-assets ratio: 1. Which ratio is most important to look at when potentially investing in a company as a stockholder and why? 2. If you are a new supplier, which ratio would you be most interested in to decide to sell your merchandise? Why? Assume your terms for payment are 2/10; net/30. 3. Assume you are a banker and a corporation has met with you to borrow $100,000 and pay...
Times-Interest-Earned Ratio The Morris Corporation has $400,000 of debt outstanding, and it pays an interest rate...
Times-Interest-Earned Ratio The Morris Corporation has $400,000 of debt outstanding, and it pays an interest rate of 9% annually. Morris's annual sales are $1.6 million, its average tax rate is 40%, and its net profit margin on sales is 3%. If the company does not maintain a TIE ratio of at least 5 to 1, its bank will refuse to renew the loan and bankruptcy will result. What is Morris's TIE ratio? Do not round intermediate calculations. Round your answer...
Times-Interest-Earned Ratio The Morrit Corporation has $960,000 of debt outstanding, and it pays an interest rate...
Times-Interest-Earned Ratio The Morrit Corporation has $960,000 of debt outstanding, and it pays an interest rate of 9% annually. Morrit's annual sales are $6 million, its average tax rate is 25%, and its net profit margin on sales is 3%. If the company does not maintain a TIE ratio of at least 6 to 1, then its bank will refuse to renew the loan, and bankruptcy will result. What is Morrit's TIE ratio? Do not round intermediate calculations. Round your...
Times-Interest-Earned Ratio The Morris Corporation has $950,000 of debt outstanding, and it pays an interest rate...
Times-Interest-Earned Ratio The Morris Corporation has $950,000 of debt outstanding, and it pays an interest rate of 9% annually. Morris's annual sales are $4.75 million, its average tax rate is 40%, and its net profit margin on sales is 8%. If the company does not maintain a TIE ratio of at least 3 to 1, its bank will refuse to renew the loan and bankruptcy will result. What is Morris's TIE ratio? Do not round intermediate calculations. Round your answer...
it's about long term debt paying ability ratios: From these ratios ( Times interest earned ratio...
it's about long term debt paying ability ratios: From these ratios ( Times interest earned ratio - Fixed charge coverage ratio - debt raio) , which would you choose to use? why?
The Interest Coverage (or Times Interest Earned) Ratio This ratio indicates a business' ability to pay...
The Interest Coverage (or Times Interest Earned) Ratio This ratio indicates a business' ability to pay the interest on its debt. It is calculated: EBIT / Interest Expense which is easy to remember if you remember those two accounts on the income statement. EBIT is usually the line immediately before interest expense. The Preferred Dividend Coverage Ratio Like the Interest Coverage Ratio, this ratio indicates a business' ability to pay dividends to its preferred shareholders. It is calculated: Net Income...
Current Ratio= 2.33 Operating Profit Margin= 2.3% Quick Ratio= 0.8488 Total Debt to Equity= 1.21 Inventory...
Current Ratio= 2.33 Operating Profit Margin= 2.3% Quick Ratio= 0.8488 Total Debt to Equity= 1.21 Inventory Turnover= 4.12 Return on Assets= 1% Average Collection Period= 37.79 days Return on Equity= 2.22% Total Assets Turnover= 2.31 TIE= 1.46 Select two of the ratios you derived in Corrigan Corporation. Without re-stating the formula itself, explain what the ratio means in terms of the corporation’s financial health. The industry norms are provided below to use as comparative information. Points will be awarded based...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT