9. a. Using the financial statements for GMT Enterprises for 2010 (given below), calculate the return on equity, the debt ratio, and the times interest earned ratio. b. Suppose the industry average debt ratio is 50%. Give one reason why the debt ratio for GMT Enterprises may be considered favorable, and give one reason why the debt ratio for GMT Enterprises may be considered unfavorable. GMT Enterprises 2010 Financial Statements Income Statement ($) Sales Operating expenses EBIT Interest expense EBT Taxes (40%) 10,000 8,200 1,800 100 1,700 680 2 Net income 1,020 Balance Sheet ($) Current assets Fixed assets Total assets 1,500 4,000 5,500 Accounts payable Accruals Long-term debt Common stock Retained earnings Total liabilities & equity 900 600 400 2,100 1,500 5,500