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Calculate the debt to total assets ratios for each company

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Reference no: EM132730775

The following information is available from the 2020 financial statements of Alpha Inc. and Omega Ltd.:
(in millions)

                                                                                                 Alpha Inc.              Omega Ltd.

Income tax expense..................................................... $ 361                   $ 766

Interest expense............................................................... 480                 1,423

Profit................................................................................. 654                   948

Total assets................................................................. 24,750                  37,525

Total current liabilities................................................... 5,970                 14,109

Total liabilities.............................................................. 16,485                  31,816

Instructions:

Problem (a) Based on the information given, calculate the following ratios for each company:

1. Debt to total assets

2. Interest coverage

Problem (b) What conclusion concerning each company's long-run solvency can be determined from these ratios?

Reference no: EM132730775

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