A company has a debt-to-equity ratio of 0.8, total assets of $2,500,000, and total liabilities of $1,200,000.
Fantastic news! We've Found the answer you've been seeking!
Question:
A company has a debt-to-equity ratio of 0.8, total assets of $2,500,000, and total liabilities of $1,200,000. The auditor needs to determine the company's equity and calculate the interest coverage ratio to assess the company's ability to meet its interest payments. If the company has an operating income of $400,000 and interest expense of $50,000, what is the company's equity, and what is the interest coverage ratio?
Expert Answer:
The detailed answer for the above question is provided below Calculation of companys equ... View the full answer
Related Book For 
Auditing a business risk appraoch
ISBN: 978-0324375589
6th Edition
Authors: larry e. rittenberg, bradley j. schwieger, karla m. johnston
Posted Date:
