Leverage and coverage ratios, Finance Basics

Assignment Help:

Leverage and Coverage Ratios

(The data for interest coverage are in I-Metrix's liquidity ratios section. The others listed in this table are in the leverage ratios section.)

	Most Recent Fiscal Year	Fiscal Year (-1)	Fiscal Year (-2)	Fiscal Year (-3)
Debt/Equity	0.6223	0.6893	1.1880	0.1094
Debt/Assets	0.7906	0.7045	0.7070	0.4382
Interest Expense/Long term Debt	0.0501	0.0981	0.0324	0:no LTD
Times Interest Earned (TIE)	12.2922	9.1947	18.8934	34.7779
Interest Coverage	12.2922	9.1947	18.8934	34.7779

What trends, if any, are apparent in these ratios?
Are these favorable or unfavorable to the shareholders?
Are these favorable or unfavorable to the debt holders?
The debt/equity ratio from I-Metrix is based on book values. If you were to calculate the ratio on the basis of market values, would this ratio tend to be higher or lower than on the basis of book values? Why?

Related Discussions:- Leverage and coverage ratios

Find out operating leverage, (i) Find out operating leverage from the follo...

(i) Find out operating leverage from the following data: Sales Rs.50000 Variable Cost 60% Fixed Cost Rs.12000

Objectives or goals of business, Objectives or Goals of Business 1. P...

Objectives or Goals of Business 1. Profit maximization - This is a traditional and a cardinal objective of a business. This is so for the following purpose: To

Bills of exchange, Bills of Exchange Bills of Exchange are a source of...

Bills of Exchange Bills of Exchange are a source of finance in specifically in the export trade. A bill of swapping is an unconditional arrange in writing addressed via one pe

Agency theory - finance, Agency Theory The agency problem between mana...

Agency Theory The agency problem between managers and shareholders can be resolved via paying high dividends. If retention is low, managers are necessary to increase additiona

The profitability index for the investment, Question Clifton-Peters L...

Question Clifton-Peters Ltd is a manufacturer of household goods located in Melbourne. They presently make and wholesale fruit juicers, blenders and baking equipment. The Gen

Type of partnerships, Type of Partnerships There are two main kinds of ...

Type of Partnerships There are two main kinds of partnerships. Namely: Ordinary Partnership - An ordinary partnership is one in which all members have unlimited liability.

Forms of business organizations, Forms of Business Organizations The te...

Forms of Business Organizations The term business is wide in meaning. It includes all human activities made for the sake of earning profits through the process of production of

Term structure of interest rates, Term Structure of Interest Rates The...

Term Structure of Interest Rates The term structure of interest rate give details the relationship between the term to maturity and interest rates and the differences between

Creditors trade - measuring business performance, Creditors Trade - Measuri...

Creditors Trade - Measuring Business Performance Creditors Trade These are interested in the company's capability to meet their short-term obligations as and whenever the

Explain trade liberalisation, Problem 1 a) Explain Trade Liberalisatio...

Problem 1 a) Explain Trade Liberalisation and give your views whether emerging economies should adopt trade liberalization protectionist measures to attain economic growth.

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages