Long-term solvency refers to a company’s ability to pay its long-term obligations. Financing ratios provideinvestors and creditors with an indication of this element of risk.Required:1. Calculate the debt to equity ratio for AGF for 2018. The average ratio for the stocks listed on the New YorkStock Exchange in a comparable time period was 1.0. What information does your calculation provide aninvestor?2. Is AGF experiencing favorable or unfavorable financial leverage?3. Calculate AGF’s times interest earned ratio for 2018. The coverage for the stocks listed on the New YorkStock Exchange in a comparable time period was 5.1. What does your calculation indicate about AGF’s risk?
Long-term solvency refers to a company’s ability to pay its long-term obligations. Financing ratios provide
investors and creditors with an indication of this element of risk.
Required:
1. Calculate the debt to equity ratio for AGF for 2018. The average ratio for the stocks listed on the New York
Stock Exchange in a comparable time period was 1.0. What information does your calculation provide an
investor?
2. Is AGF experiencing favorable or unfavorable financial leverage?
3. Calculate AGF’s times interest earned ratio for 2018. The coverage for the stocks listed on the New York
Stock Exchange in a comparable time period was 5.1. What does your calculation indicate about AGF’s risk?
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