Leverage and coverage ratios, Finance Basics

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Leverage and Coverage Ratios

(The data for interest coverage are in I-Metrix's liquidity ratios section. The others listed in this table are in the leverage ratios section.)

	Most Recent Fiscal Year	Fiscal Year (-1)	Fiscal Year (-2)	Fiscal Year (-3)
Debt/Equity	0.6223	0.6893	1.1880	0.1094
Debt/Assets	0.7906	0.7045	0.7070	0.4382
Interest Expense/Long term Debt	0.0501	0.0981	0.0324	0:no LTD
Times Interest Earned (TIE)	12.2922	9.1947	18.8934	34.7779
Interest Coverage	12.2922	9.1947	18.8934	34.7779

What trends, if any, are apparent in these ratios?
Are these favorable or unfavorable to the shareholders?
Are these favorable or unfavorable to the debt holders?
The debt/equity ratio from I-Metrix is based on book values. If you were to calculate the ratio on the basis of market values, would this ratio tend to be higher or lower than on the basis of book values? Why?

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