You are thinking of investing in a company with the following balance sheet and income statement...

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You are thinking of investing in a company with the following balance sheet and income statement data: Short-term assets: $1,500,000 Short-term liabilities: $500,000 Total debt: $750,000 Total assets: $2,500,000 EBIT: $300,000 Net Income: $120,000 Interest payments: $100,000 Industry standards are shown below Current ratio: 2 Debt ratio: 50% Times Interest Earned Ratio=2 Return on Equity= 5% a. Calculate the current ratio to assess the company's liquidity. b. Calculate the debt ratio. c. Calculate the times interest earned ratio d. Calculate the return on equity ratio. (Hints: Total assets = Total Debt + Equity) e. Is this a company whose stock you want to buy? Why or why not? You are thinking of investing in a company with the following balance sheet and income statement data: Short-term assets: $1,500,000 Short-term liabilities: $500,000 Total debt: $750,000 Total assets: $2,500,000 EBIT: $300,000 Net Income: $120,000 Interest payments: $100,000 Industry standards are shown below Current ratio: 2 Debt ratio: 50% Times Interest Earned Ratio=2 Return on Equity= 5% a. Calculate the current ratio to assess the company's liquidity. b. Calculate the debt ratio. c. Calculate the times interest earned ratio d. Calculate the return on equity ratio. (Hints: Total assets = Total Debt + Equity) e. Is this a company whose stock you want to buy? Why or why not?

Answer rating: 100% (QA)

a Current Ratio Shortterm Assets Shortterm Liabilities Current Ratio 1500000 50... View the full answer