Question

Calculate financial leverage measures. The following information was available for the year ended December 31, 2013:
Earnings before interest and
taxes (operating income) ....... $60,000
Interest expense ........... 10,000
Income tax expense ......... 15,000
Net income ............. $ 35,000
Total assets at year-end ........... 200,000
Total liabilities at year-end....... 120,000

Required:
a. Calculate the debt ratio at December 31, 2013.
b. Calculate the debt/equity ratio at December 31, 2013.
c. Calculate the times interest earned for the year ended December 31, 2013.



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  • CreatedOctober 05, 2013
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