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

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.

 

 

 

 

Posted Date: 7/25/2012 9:02:37 AM | Location : United States







Related Discussions:- Long-term solvency ratios (financial leverage ratios), Assignment Help, Ask Question on Long-term solvency ratios (financial leverage ratios), Get Answer, Expert's Help, Long-term solvency ratios (financial leverage ratios) Discussions

Write discussion on Long-term solvency ratios (financial leverage ratios)
Your posts are moderated
Related Questions
How does the net present value relate to the value of the firm? The net present value (NPV) is the dollar amount of the change to the value of the organization if the project wit


A mortgage may be defined as a pledge of property to secure a debt payment; in this context, we will use the term property to mean real estate. If the

ARR AND PAYBACK (a) Accounting rate of return (ARR) is a computation of the return on an investment where the annual profit prior to interest and tax is expressed as a percen

Effect on Stock Valuation Until the 1960s, common stocks were viewed as a good instrument against loss caused by inflation. Also, before 1960, stocks were not providing full he

Q. Example on Controlling working capital? Describe how a manufacturing company could control its working capital levels and impact of the suggested control measures. Solut

Q. What do you mean by Sarbanes-Oxley? Sarbanes-Oxley (SOX) - Sarbanes-Oxley Act was signed into law on 30 July 2002 by President Bush. Act is designed to oversee the financial

What is the operating leverage effect and what causes it?  What are the potential benefits and negative consequences of high operating leverage? The operating leverage effect i

Types of Mortgages 1. Traditional Mortgages 2. Non -  Traditional Mortgages 3.  Graduated-Payment Mortgages (GPMs) 4.  Pledged-Account Mortg

Under what circumstances would market to book value ratios be misleading?  Explain. The Market to Book ratio is helpful, however it is only a irregular approximation of how li