Calculate the values of two capital structure ratios

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Question 1: Calculate the values of two (2) capital structure ratios of the company for 2019 and 2020.

Debt ratio = Total Liabilities / Total Assets

Debt ratio (2019) = 653.30 / 1379.20 = 47.37%

Debt ratio (2020) = 1174.20 / 2575.70 = 45.59%

Interest coverage ratio = Operating profit or EBIT / Interest expense

Interest coverage ratio (2019) = 359.30 / 4.50 = 79.84 times

Interest coverage ratio (2020) = 253.10 / 8.90 = 28.44 times

Question 2: Analyse the capital structure of the company in 2019 as compared to 2020 based on the ratios chosen.

Reference no: EM132830488

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