Ellies Electronics Incorporated has total assets of $ 63 million and total debt of $ 42 million.
Question:
a. What is Ellie’s debt ratio?
b. What is Ellie’s times interest earned?
c. Based on the information above, would you recommend to Ellie’s management that the firm is in a strong enough position to assume more debt and increase interest expense to $ 9 million?
Step by Step Answer:
a Debt ratio total debt total assets 42 million 63 million 06667 or 6667 b Times interest earn...View the full answer
Foundations of Finance The Logic and Practice of Financial Management
ISBN: 978-0132994873
8th edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
Related Video
Interest, debt, finance, and capital markets are all important concepts in the world of economics and business. Interest is the cost of borrowing money, and it is typically expressed as a percentage of the amount borrowed. Debt is the money that is borrowed, and it has to be repaid with interest. Finance is the study of how individuals, companies, and organizations manage their money and investments. Capital markets are the places where companies and governments can raise money by selling stocks and bonds to investors. These markets play an important role in the overall economy by helping to fund investment and growth.
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