Nina Jones, the owner of dance studios, is wondering why her bookkeeper keeps complaining that it is difficult to pay the bills on time. Nina has looked at her income statement and can't figure out what the problem is. Looking at the following ratios for the company, write an explanation that will help Nina understand the challenges her firm is facing.

2009 2008

Debt ratio 68% 55%

Long-term debt to total capitalization 47% 20%

Times interest earned 8.9 times 5.4

Cash interest coverage (2.4 times) 1.3

Fixed charge coverage 6.0 times 3.2

Cash flow adequacy (4.6 times) 0.3

Answer rating: 100% (QA)

Based on the provided ratios it appears that Ninas dance studio is facing several financial challenges that are affecting the bookkeepers ability to p... View the full answer