Chapter 9, Problem 9.12S

LO 5

(Learning Objective 5: Compute and evaluate three ratios) Tolbert Plumbing Products Ltd. reported the following data in 2018 (in millions):

2018
Net operating revenues	$ 28.9
Operating expenses	24.2
Operating income	4.7
Nonoperating items:	(0.8)
Interest expense
Net income	$ 3.7
Total assets	$150.0
Total common stockholder’s equity	57.0

Compute Tolbert’s leverage ratio, debt ratio and times-interest-earned ratio and write a sentence to explain what those ratio values mean. Use year-end figures in place of averages where needed for the purpose of calculating the ratios. Would you be willing to lend Tolbert $1 million? Why or why not?