In year ending 2010, ABC Corp had Total Asset of $ 523m, Total Debt of $367m, EB
ID: 2624959 • Letter: I
Question
In year ending 2010, ABC Corp had Total Asset of $ 523m, Total Debt of $367m, EBIT of $ 422m and Interest Expenses of $98m. Calculated values of Leverage Ratios are listed as answer and name of the ratios as questions. Your task is to match the each Answers with the appropriate Question. Answer Total Debt Ratio (TD/TA)=? Read Answer Items for Question 9 Debt to Equity (TD/TE) Ratio=? Read Answer Items for Question 9 Equity Multiplier (EM)=? Read Answer Items for Question 9 Times Interest Earned (TIE) Ratio=? Read Answer Items for Question 9 Answer A. 4.31 B. 0.70 C. 3.35 D. 2.35
Explanation / Answer
Total Debt Ratio (TD/TA) = 367/523 = B. 0.70
Debt to Equity Ratio (TD/TE) = 367/ (523-367) = D. 2.35
Equity Multiplier (EM) = 523/ (523-367) = C. 3.35
Times Interest Earned (TIE) Ratio = 422/98 = D. 4.31