Times Interest Earned Ratio
Refer to Practice 12 17. Compute the times interest earned ratio.
Practice 12 17
Debt to Equity Ratio
Consider the following information:
|
Short term debt |
$ 10,000 |
|
Interest expense |
7,500 |
|
Total current liabilities |
25,000 |
|
Long term debt |
70,000 |
|
Cash |
2,700 |
|
Total liabilities |
120,000 |
|
Total stockholders’ equity |
90,000 |
|
Income before income taxes |
12,000 |
Compute the debt to equity ratio assuming that (1) debt is defined to include all liabilities, (2) debt is defined to include just interest bearing debt, and (3) debt is defined to include just long term, interest bearing debt.