Total debt 1 000 000 5 000 000 Annual interest 100 000 500 000 Total sales 25 000 000 25 000 000 EBIT 6 250 000 6 250 000 Earnings available for common stockholders 3 690 000 3 450 000 Calculate the following debt and coverage ratios for the two companies Discuss their financial risk and ability to cover the costs in relation to each other Debt ratio Times interest earned ratio Calculate the following profitability ratios for the two companies Discuss their profitability relative to one anoth
Total debt 1 000 000 5 000 000 Annual interest 100 000 500 000 Total sales 25 000 000 25 000 000 EBIT 6 250 000 6 250 000 Earnings available for common stockholders 3 690 000 3 450 000 Calculate the following debt and coverage ratios for the two companies Discuss their financial risk and ability to cover the costs in relation to each other Debt ratio Times interest earned ratio Calculate the following profitability ratios for the two companies Discuss their profitability relative to one anoth
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter10: Stockholder's Equity
Section: Chapter Questions
Problem 78E: Ratio Analysis Consider the following information. Required: Calculate the stockholder payout...
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Total debt 1 000 000 5 000 000 Annual interest 100 000 500 000 Total sales 25 000 000 25 000 000 EBIT 6 250 000 6 250 000 Earnings available for common stockholders 3 690 000 3 450 000 Calculate the following debt and coverage ratios for the two companies Discuss their financial risk and ability to cover the costs in relation to each other Debt ratio Times interest earned ratio Calculate the following profitability ratios for the two companies Discuss their profitability relative to one anoth
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