Question: The Empire District Electric Company headquartered in Joplin Missouri provides

The Empire District Electric Company, headquartered in Joplin, Missouri, provides electric services and also distributes natural gas to customers primarily in the states of Missouri, Kansas, Oklahoma, and Arkansas. A devastating tornado with winds exceeding 200 miles per hour hit Joplin on May 22, 2011, killing over 160 people. Property damage was extensive with a path of destruction over 13 miles long and up to three-fourths of a mile wide. For Empire District, 4,000 power poles and 100 miles of electric lines were down; six substations were damaged leaving approximately 20,000 customers without power. The company suspended its dividend in the face of storm costs that might reach $30 million. The following summary financial items are taken from the financial statements for the year ending December 31, 2011 (dollars in thousands):
Total assets .......... $2,021,835
Current liabilities........ 97,029
Shareholders’ equity ....... 693,989
Interest expense ........ 41,302
Pretax income ........ 96,273
Assume that all long-term liabilities are in the form of long-term debt. Compute the following four ratios. In one sentence per ratio, explain what it tells you about Empire District.
1. Debt-to-equity
2. Long-term-debt-to-total-capital
3. Debt-to-total-assets
4. Interest-coverage ratio

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  • CreatedFebruary 20, 2015
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