Reference no: EM13867838

The balance sheet for Shaver Corporation reported the following:

cash, $ 5,000;

short-term investments, $ 10,000;

net accounts receivable, $ 35,000;

inventory, $ 40,000; prepaids, $ 10,000;

equipment, $ 100,000;

current liabilities, $ 40,000;

notes payable (long-term), $ 70,000;

total stock-holders' equity, $ 90,000;

net income, $ 3,320;

interest expense, $ 4,400;

income before income taxes, $ 5,280.

Compute Shavers debt-to-assets ratio and times interest earned ratio. Based on these ratios, does it appear Shaver relies mainly on debt or equity to finance its assets? Is it prob-able that Shaver will be able to meet its future interest obligations?