Two online travel companies, E-Travel and Pricecheck, provide the following selected financial data: E-Travel Pricecheck Total assets $ 4,437,156 $ 1,574,224 Total liabilities 2,254,475 466,610 Total stockholders’ equity 2,182,681 1,107,614 Sales revenue $ 2,455,426 $ 1,838,212 Interest expense 74,233 14,084 Income tax expense 134,400 37,168 Net income 279,526 469,472 Required: 1-a. Calculate the debt to equity ratio for E-Travel and Pricecheck. 1-b. Which company has higher leverage risk? 2-a. Calculate the times interest earned ratio for E-Travel and Pricecheck
Two online travel companies, E-Travel and Pricecheck, provide the following selected financial data: E-Travel Pricecheck Total assets $ 4,437,156 $ 1,574,224 Total liabilities 2,254,475 466,610 Total stockholders’ equity 2,182,681 1,107,614 Sales revenue $ 2,455,426 $ 1,838,212 Interest expense 74,233 14,084 Income tax expense 134,400 37,168 Net income 279,526 469,472 Required: 1-a. Calculate the debt to equity ratio for E-Travel and Pricecheck. 1-b. Which company has higher leverage risk? 2-a. Calculate the times interest earned ratio for E-Travel and Pricecheck
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Two online travel companies, E-Travel and Pricecheck, provide the following selected financial data:
| E-Travel | Pricecheck | |
|---|---|---|
| Total assets | $ 4,437,156 | $ 1,574,224 |
| Total liabilities | 2,254,475 | 466,610 |
| Total |
2,182,681 | 1,107,614 |
| Sales revenue | $ 2,455,426 | $ 1,838,212 |
| Interest expense | 74,233 | 14,084 |
| Income tax expense | 134,400 | 37,168 |
| Net income | 279,526 | 469,472 |
Required:
1-a. Calculate the debt to equity ratio for E-Travel and Pricecheck.
1-b. Which company has higher leverage risk?
2-a. Calculate the times interest earned ratio for E-Travel and Pricecheck.
2-b. Which company is better able to meet interest payments as they become due?
Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Req la
Req 1b
Req 2a
Req 2b
Calculate the times interest earned ratio for E-Travel and Pricecheck. (Round ratios to 1 decimal place.)
Times Interest Earned Ratio
Numerator/Denominator
Amounts
E-Travel
Pricecheck
Req 1b
Req 2b
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Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Req la
Req 1b
Req 2a
Req 2b
Calculate the debt to equity ratio for E-Travel and Pricecheck. (Round ratios to 2 decimal pla
Debt to Equity Ratio
Numerator/Denominator
Amounts
E-Travel
Pricecheck
%3D
Req la
Req 1b
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