Leverage and coverage ratios, Finance Basics

Assignment Help:

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?

Related Discussions:- Leverage and coverage ratios

Should the short-run effects on eps influence the ch, A firm has a $100 mil...

A firm has a $100 million capital budget. It is considering two project, each costing $100 million. Project A has an IRR of 20%; has an NPV of $9 million; and will be terminated af

Development of plastic money in middle asia, Development of Plastic Money i...

Development of Plastic Money in Middle Asia Motive behind the Fast Development of This Finance (Plastic Money) In Middle Asia a) High incidences of fraud via dishonest empl

Calculating cost of purchasing & prepare income, The Jacobs company needs t...

The Jacobs company needs to acquire a new lift truck for transporting its final product to the warehouse. One alternative is to purchase the truck for $45,000. Maintenance of th

Timing of investment a stock exchange, Timing of Investment a Stock Exchang...

Timing of Investment a Stock Exchange The ideal way of creation profits on the stock exchange is to buy on the bottom of the market or lowest M.P.S and sell at the top of the

Work, A bond that has $1000 face value and a contract interest rate of 11.4...

A bond that has $1000 face value and a contract interest rate of 11.4%. The bonds have a current value of $1124 and will mature in 10 years. The firms marginal tax rate is 34%. The

Mobile computing, what is mobile computing

what is mobile computing

Mortgage and finance broking, i need help on my assisgnmnet

i need help on my assisgnmnet

Disadvantage of joint stock companies, Disadvantage of Joint Stock Companie...

Disadvantage of Joint Stock Companies Difficult to reconstruct the capital Many formalities in forming the company Heavy initial capital outlay. Loss of secrec

Standard ratio analysis-compound growth rates, Standard ratio analysis shou...

Standard ratio analysis should be used to supplement the discussion of strength and weakness. The following ratios are most often used by practitioners: (a) Growth Rates: PEG R

Option Pricing, Show that for any constant 0=a=1, C(aK1 + (1-a)K2) = aC(K1)...

Show that for any constant 0=a=1, C(aK1 + (1-a)K2) = aC(K1) + (1-a)C(K2) where C(k) is the European option price with strike K. All the options in this question are assumed to be

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages