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
Best practice or functional benchmarking Compare an internal function to 'the best' however not necessarily an organisation in same industry for example compare administrati

What is the effect of stock (not cash) dividends and stock splits on the market price of common stock?  Why do corporations declare stock splits and stock dividends? Stock splits

The consolidated income statement for AB Group for the year ended 30 June 2010: (all amounts in the workings are in $000, unless stated otherwise)

Q. Formulation of Collection Policy ? Formulation of Collection Policy:- The third characteristic of the receivable management is to formulate a collection policy. Collection p

Explain and compare forward vs. backward internalization. Forward internalization takes place when MNCs with intangible assets make FDI in order to use the assets on a larger sca

State the Significance of the Cost of Capital It must be recognized at the outset that cost of capital is one of the most difficult and disputed topics in the finance theory.

There are two major factors to be considered while analyzing sovereign bonds. They are: economic risk and political risk. Economic risk is all about the ability a

Q. How to Select the pattern of the investment? When the funds have been procured than a decision about the investment pattern is to be taken. The selection of the investment p

Tests in Investments There are many rules that specify how the past data of share prices can be used to obtain a clue regarding the future prices of shares. Such rules would be

The option features embedded in many bonds and fixed-income securities have made the binomial interest rate tree approach a valuable model for pricing debt. Binomial