Question: Looking at Table 6.4, why do public utilities have such a low times-interest earned ratio? Why is the ratio for information technology companies so high?

Looking at Table 6.4, why do public utilities have such a low times-interest earned ratio? Why is the ratio for information technology companies so high?

?Table 6.4

Nonfinancial companies in the Standard and Poor's 500 index and industry components.

Nonfinancial companies in the Standard and Poor's 500 index and industry components. (Numbers in parentheses are the number of companies in sample.) 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Times interest earned 8.4 7.1 6.5 8.5 9.2 8.7 9.2 9.4 8.0 7.2 Debt to total assets (%) 22.7 24.9 23.4 23.0 23.2 24.8 25.1 26.3 30.2 30.3 Industry Debt Ratios 2016 Times interest earned Debt to total assets (%) Energy (35) Materials (25) Industrials (67) Consumer discretionary (81) Consumer staples (32) Health care (55) Information technology (58) Telecommunicaton services (5) Utilities (28) NM 29.7 5.3 30.8 8.4 30.1 8.1 32.8 11.1 30.7 8.9 29.0 14.4 23.5 2.5 43.7 3.3 35.9 00 00

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1 Why do public utilities have such a low timesinterest earned ratio Public utilities have such a low timesinterest earned ratio because they are generally regulated by government agencies This means ... View full answer

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