Shown below are data from recent reports of two toy makers. Dollar amounts are stated in thousands.

Question:

a. Compute for each company
(1) The debt ratio and
(2) The interest coverage ratio.
b. In your opinion, which of these companies would a long-term creditor probably view as the safer investment?Explain.

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Financial and Managerial Accounting the basis for business decisions

ISBN: 978-0078111044

16th edition

Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello

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Question Posted: Apr 17, 2014 09:50 AM

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Shown below are data from recent reports of two toy makers. Dollar amounts are stated in thousands.

Question:

Toyco Playco Total assets . . .. Total liabilities Interest expense . Operating income $615,132 $2,616,388 349,792 1,090,776 37,588 304,672 28,026 13,028

Step by Step Answer:

a 1 Debt ratio Toyco Total liabilities 349792 57 Total assets 615132 Playco Tot...View the full answer

Financial and Managerial Accounting the basis for business decisions

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