Question

Ellie’s Electronics Incorporated has total assets of $ 63 million and total debt of $ 42 million. The company also has operating profits of $ 21 million with interest expenses of $ 6 million.
a. What is Ellie’s debt ratio?
b. What is Ellie’s times interest earned?
c. Based on the information above, would you recommend to Ellie’s management that the firm is in a strong enough position to assume more debt and increase interest expense to $ 9 million?


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  • CreatedSeptember 11, 2015
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