Financial information from fiscal year 2016 for two companies competing in the cosmetics industryThe Este Lauder Companies

Financial information from fiscal year 2016 for two companies competing in the cosmetics industry—The Estée Lauder Companies and e.l.f. Beauty Inc.—appears in the table below. All dollar values are in thousands.

a. Calculate the debt ratio and the times interest earned ratio for each company. In what way are these companies similar in terms of their debt usage, and in what way are they very different?
b. Calculate the ratio of interest expense to total liabilities for each company. Conceptually, what do you think this ratio is trying to measure? Why are the values of this ratio dramatically different for these two firms? Suggest some reasons.

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e.l.f. Beauty $414,729 Estée Lauder $9,223,300 Total assets Total liabilities 273,867 26,095 16,283 5,636,000 1,625,900 EBIT Interest expense 70,700