Allen Company and Barker Company are competitors in the same industry. Selected financial data from their 2009 statements follow.

Required
a. Compute the following ratios for each company:
1. Times interest earned
2. Debt ratio
3. Debt/equity ratio
4. Debt to tangible net worth
b. Is Barker Company in a position to take on additional long-term debt? Explain.
c. Which company has the better long-term debt position?Explain.

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Balance Sheet December 31, 2009 Accounts receivable Property, plant, and equipment Preferred stock, $1 par Common stock, $10 par Total liabilities and capital Income Statement For the Year Ended December 31, 2009 0 Cost of goods sold Selling and administrative expenses 2,050,000 expense Industry Averages 7.2 times Times interest eamed Debt ratio Debt/equity Debt to tangible net worth