Use the following ratios from Walmart, Target, and Dollar General to answer Questions 12-13. Ratio Liabilities-to-equity ratio Times interest earned Cash from operations to total debt Target Walmart Walmart 1.246 11.49 0.787 Target This cannot be determined based on the information given O Dollar General 1.275 15.11 0.447 Dollar General 1.17 Based on the information given, which of the three companies is better able to cover its interest expense with current income? 7.85 0.974

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
### Financial Ratios Comparison

The following financial ratios from Walmart, Target, and Dollar General are provided to analyze and answer Questions 12-13.

#### Ratio Analysis

| Ratio                           | Walmart | Target | Dollar General |
|---------------------------------|---------|--------|----------------|
| **Liabilities-to-equity ratio** | 1.246   | 1.275  | 1.17           |
| **Times interest earned**       | 11.49   | 15.11  | 7.85           |
| **Cash from operations to total debt** | 0.787   | 0.447  | 0.974          |

#### Question:
Based on the information given, which of the three companies is better able to cover its interest expense with current income?

- [ ] Target
- [ ] Walmart
- [ ] This cannot be determined based on the information given
- [ ] Dollar General

**Note:** This data is used to facilitate understanding of financial stability and performance comparisons between major retail companies. Consider the “Times interest earned” ratio, which indicates the company’s ability to meet interest expenses. A higher ratio suggests a better capacity to cover interest.

Points: 1.33 pts
Transcribed Image Text:### Financial Ratios Comparison The following financial ratios from Walmart, Target, and Dollar General are provided to analyze and answer Questions 12-13. #### Ratio Analysis | Ratio | Walmart | Target | Dollar General | |---------------------------------|---------|--------|----------------| | **Liabilities-to-equity ratio** | 1.246 | 1.275 | 1.17 | | **Times interest earned** | 11.49 | 15.11 | 7.85 | | **Cash from operations to total debt** | 0.787 | 0.447 | 0.974 | #### Question: Based on the information given, which of the three companies is better able to cover its interest expense with current income? - [ ] Target - [ ] Walmart - [ ] This cannot be determined based on the information given - [ ] Dollar General **Note:** This data is used to facilitate understanding of financial stability and performance comparisons between major retail companies. Consider the “Times interest earned” ratio, which indicates the company’s ability to meet interest expenses. A higher ratio suggests a better capacity to cover interest. Points: 1.33 pts
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Income Statement Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education