What information does your calculation provide an investor

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AGF Foods Company is a large, primarily domestic, consumer foods company involved in the manufacture, distribution, and sale of a variety of food products. Industry averages are derived from Troy's The Almanac of Business and Industrial Financial Ratios. Following are the 2011 and 2010 comparative income statements and balance sheets for AGF. (The financial data we use are from actual financial statements of a well-known corporation, but the company name is fictitious and the numbers and dates have been modified slightly to disguise the company's identity.)
Long-term solvency refers to a company's ability to pay its long-term obligations. Financing ratios provide investors and creditors with an indication of this element of risk.

Required:

1. Calculate the debt to equity ratio for AGF for 2011. The average ratio for the stocks listed on the New York Stock Exchange in a comparable time period was 1.0. What information does your calculation provide an investor?

2. Is AGF experiencing favorable or unfavorable financial leverage?

3. Calculate AGF's times interest earned ratio for 2011. The coverage for the stocks listed on the New York Stock Exchange in a comparable time period was 5.1. What does your calculation indicate about AGF's risk?

Reference no: EM131006853

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