Long-term solvency ratios (financial leverage ratios), Financial Management

Assignment Help:

Long-Term Solvency Ratios (Financial Leverage Ratios)

 

Debt-Equity Ratio = Total Debt / Total Equity

à It is a measure of a company's debt utilization. It gives the extent to which a company is financed by debt.

 

Interest Coverage Ratio = EBIT / Interest

à It is also called as the 'Times Interest Earned' or 'TIE Ratio'. It is a measure of a company's interest obligations.

 

Cash Coverage Ratio = {EBIT + Depreciation} / Interest

à It is a measure of a company's interest obligation coverage by cash alone.

 

 

 

 


Related Discussions:- Long-term solvency ratios (financial leverage ratios)

Characteristics of hedge funds, Characteristics of Hedge Funds Hedge Fu...

Characteristics of Hedge Funds Hedge Funds are commonly referred to as "absolute return strategies", which means that many are designed to seek positive returns in most market

Tests for consistency, Tests for Consistency The consistency of the ind...

Tests for Consistency The consistency of the index numbers have been tested over the years. The most important of these tests are: The time reversal test The

Tax consideration affect cost of debt and cost of equity, How do tax consid...

How do tax considerations affect the cost of debt and the cost of equity? As interest on debt is tax deductible to the issuing firm, as much higher the tax rate the lower the aft

Compute the fair value of the stock, QUESTION Part A Lavista Ltd i...

QUESTION Part A Lavista Ltd is a leading music entertainment company in the country and the stocks of the company are actively traded in the stock exchange. For the year j

What is diversification, Diversification A  strategy  which tends to mo...

Diversification A  strategy  which tends to move  into  new  products  and  new  markets  in  which  organisation is unfamiliar with. Related for example vertical forwar

Stakeholders, identify five stakeholder groups and breifly explain their fi...

identify five stakeholder groups and breifly explain their financil and other objectives

Cost control strategies in organisations, 1. List the common elements of a ...

1. List the common elements of a submission for a major resource acquisition (purchase) 2. What is the difference between: A fixed asset and current asset? 3. If you worked i

Banking sector securities, The banking sector has a vital and active ...

The banking sector has a vital and active role in the money market. The transactions taking place in these securities are large in size, both in terms of volumes

What is the debt security in the financial term, What is the debt security ...

What is the debt security in the financial term? Debt instruments are instruments which promise the payment of specified sums to the investor. Illustrations of debt instruments

This case has been framed in order to test the skill, Ask ques1. How would ...

Ask ques1. How would you judge the potential profit of Bajaj Electronics on the first year of sales to Booth Plastics and give your views to increase the profit? 2. Suggestion rega

Write Your Message!

Captcha
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