Chapter 9, Problem 89E

Ratio Analysis

Rising Stars Academy provided the following information on its 2019 balance sheet and state mcnt of cash flows:

Long-term debt	S 4,400	Interest expense	S 398
Total liabilities	8,972	Net income	559
Total assets	38,775	Interest payments	432
Total equity	29,803	Cash flows from operations	1.015
Operating income	1.223	Income tax expenses	266
		Income taxes paid	150

Required:

1. Calculate the following ratios for Rising Stars: (a) debt to equity, (b) debt to total assets, (c) long-term debt to equity, (d) times interest earned (accrual basis), and (e) times interest earned (cash basis). (Note: Round answers to three decimal places.)
2. CONCEPTUAL CONNECTION Interpret these results.

3.What does it mean if a bond is “callable’