Calculate the times interest earned ratio

Assignment Help Business Economics
Reference no: EM131868745

The income statements for Home Depot, Inc. (HD) spanning the period 2006-2008 are found below:

2008

2009

2010

Earnings before interest and taxes

$7,316,000

$9,700,000

$9,425,000

Interest expense

(696,000)

(392,000)

(143,000)

Income before tax

$6,620,000

$9,308,000

$9,282,000

Income tax expense

(2,410,000)

(3,547,000)

(3,444,000)

Net Income

$4,210,000

$5,761,000

$5,838,000

a. Calculate the times interest earned ratio for each of the years for which you have data.

b. What is your assessment of how the firm's ability to service its debt obligations has changed over this period?

c. How does the change in debt affect the firm's cost of capital?

Reference no: EM131868745

Questions Cloud

Cash flow to stockholders for the year : If the company paid out $502702 in cash dividends during Year 1, what was the cash flow to stockholders for the year?
What was net capital spending for year 1 : The company's Year 1 income statement showed a depreciation expense of $342800.
Discuss balance of ethics when conducting community research : Discuss the balance of ethics when conducting community-based research, specifically when exploring a controversial public health issue.
Research the access to essential health commodities : Research the access to essential health commodities. Medical innovations are failing many patients globally.
Calculate the times interest earned ratio : a. Calculate the times interest earned ratio for each of the years for which you have data.
Find a law that has been recently established in your state : Find a law that has been recently established in your state. Describe the background of the law.
What are the advantages of cbpr over traditional research : Describe a plan for identifying and engaging partners for a potential CBPR project. What are the advantages of CBPR over traditional research?
Find a case in your own federal appellate court : Discuss the effect of this court case on health care delivery or operations. For example, will patient care be changed?
Offset a potential loss on another investment : Hedging (buying a security to offset a potential loss on another investment) and insurance can provide additional ways to manage risk.

Reviews

Write a Review

Business Economics Questions & Answers

  Why is an increase in aggregate demand not helpful

When the economy is operating at full employment, why is an increase in aggregate demand not helpful to the economy?

  Planning six-day trip to the national conference

The student chapter of the American Society of Mechanical Engineers is planning a six-day trip to the national conference in Albany, NY. For transportation, the group will rent a car from either the State Tech Motor Pool or a local car dealer. The Mo..

  Significant benefits to the use of public transportation

After a recent study showed significant benefits to the use of public transportation, government officials have hired your consulting firm to increase the use of public transportation.  In the initial meeting between the government officials and y..

  Preferably from an actual business operation

Provide an example (preferably from an actual business operation) that demonstrates the differences in economic profit and accounting profit. You should include opportunity costs (explicit and implicit) in the comparison. Using your actual profit cal..

  Monopolistically competitive industry could become oligopoly

Discuss under what circumstances a monopolistically competitive industry could become an oligopoly, could become a monopoly, could become purely competitive. Describe how an employer in a purely competitive labor market determines its profit maximizi..

  International policy cooperation and international policy

Explain the difference between international policy cooperation and international policy coordination. Which do you believe is most common today?

  Linear tax affects outcomes in terms of output-work effort

Show how moving from a lump sum tax to a linear tax affects outcomes in terms of output and work effort. What is the effect on economic efficiency? How does your picture show this? You should use a linear PPF (so that the wage without distortions is ..

  How do automatic stabilizers affect budget deficits

How do automatic stabilizers affect budget deficits and surpluses? How would automatic stabilizers be affected by an annually balanced budget rule? Why do automatic stabilizers minimize the lag problems with fiscal policy?

  The determinants of supply

Then do similar for every of the determinants of supply in Equation 2.2. In every instance, would equilibrium market price increase or decrease.

  Difference between monopoly price-average cost pricing

With the aid of a diagram explain the difference between monopoly price, average cost pricing, and marginal cost pricing of a natural monopoly. Which is the most efficient and why

  Federal trade commission and the department of justice

When companies in oligopolistic industries announce a proposed merger, it is often met with resistance from antitrust authorities (such as the Federal Trade Commission (FTC) and the Department of Justice (DOJ) in the U.S.). In the U.S., we have seen ..

  Assume that banks lend out all their excess reserves

Assume that banks lend out all their excess reserves. Currently, the legal reserves that banks must hold equal 11.5 billion$. If the Federal Reserve decreases its reserve requirement from 10% to 5%, then there is potential for the whole banking syste..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd