Question

The following information for Kirsten Corp. has been obtained from the company’s 2008 and 2009 financial statements.
Required:
(a) Kirsten Corp. has applied for a $50 million long-term loan from Prosperous Bank. Cornell Manufacturing is considering purchasing 10,000 shares of Kirsten’s common stock. Would Prosperous Bank or Cornell Manufacturing be more likely to be interested in evaluating Kirsten’s financial leverage? Explain your choice.
(b) Compute Kirsten’s long-term debt to equity ratio in 2008 and 2009. Did the company become more or less leveraged between the end of 2008 and the end of 2009?
(c) Compute Kirsten’s times interest earned ratio in both 2008 and 2009.Did this ratio improve or deteriorate between the end of 2008 and the end of 2009? Explain.


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  • CreatedMarch 27, 2015
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