a. Calculate a measure of times-interest-earned for the industry. b. Calculate a measure of times-interest-earned for each company. c. Calculate the average of the times-interest-earned ratios for the individual companies.

a. Calculate a measure of times-interest-earned for the industry. b. Calculate a measure of times-interest-earned for each company. c. Calculate the average of the times-interest-earned ratios for the individual companies.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Q 1

Exercise n°1.
Here are some data for five companies in the same industry:
Company Code
A
в
D
E
EBIT
10
30
100 -3
80
Interest expense5
15
50
1
a. Calculate a measure of times-interest-earned for the industry.
b. Calculate a measure of times-interest-earned for each company.
c. Calculate the average of the times-interest-earned ratios for the
individual companies.
d. Does changing the method of calculation make a significant
difference to the end result?

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