Debt-To-Equit Ratio

CML's equity ratio increased to 0.4 and correspondingly debt ratio decreased to 0.15 from 2001 to 2005. Generally it is a good trend, even though there has been a decrease in equity ratio in 2005 from 0.45 to 0.40 and an increase in debt ratio from 2004 to 2005, it may be due to the acquisition from US group KKR. However, in 2005, equity is almost three times debt, which means the capital structure is still in good condition.

In 2016, the company has 8,970,824 US Dollars in Long Term Assets (Current Assets: 7,036,578), 146,947,000 US Dollars in profits, and 6,959,225 US Dollars in Total Liabilities (Current Liabilities: 2,689,770). The problem with Labilities is that it is debt that has to be paid off over a certain period of time and in this case for current liabilities, it is a year. Labilities are expected to be paid off with cash but that’s a problem for Cabela’s. Cabela’s has a cash flow of -51,241,000 US Dollars and a long term debt value of 3,158,085 US Dollars which means cash is limited for Cabela’s. The current Ratio is at 2.616 which means the company is not managing its assets a properly and in turn could be having financial issues. [2] What is also not a good sign is the debt to equity ratio is 3.460 and this value is a sign that the Cabela’s has a high debt level and is having financial troubles. [3] Then the Return on Sales Ratio is .04 or 4% which terrible because this percent should be over 10%. Another sign that a company is having trouble is that the Acid Test Ratio is 2.30 because the ratio value should never be over 1. These troubling financial records shows that Cabela’s is having troubles but the real certain are in the direction of the

The firm shows positive health for the Shareholders Equity with an equity ratio of 44.2% in 2011 and increasing to 45.2% in 2012. Calculating the percent of total assets that shareholders would receive in the event of company liquidation looks positive and very healthy for any investors or shareholders of this firm. The interest coverage ratio is also at a value that is significantly positive 14.0% in 2011 and 12.8% in 2012. Although 2021 shows a decrease, the company is still very capable of generating sufficient revenues to cover their interest payments on any debt they have incurred.

The D/A ratio are more or less stable for the period and only a quarter of total assets are financed by creditors. As far as D/E ratio, the company is careful to keep its interest expenses down and instead of pursuing an aggressive growth policy and putting everything at stake it is following a balanced approach by keeping it around 35% over the period.

Solvency ratios: The solvency ratios debt to total assets ratio and times interest earned tells creditors if a company will be able to pay maturing debt and interest. Total liabilities divided by total assets is the debt to total assets ratio. Creditors will determine if a company can pay the maturing debt by the lower the percentage of the debt to total assets ratio the more likely it will be able to pay its debts. The times interest earned is income before income taxes and interest expense divided by interest expense. The result of this ratio will tell creditors and investors the company’s ability to pay interest as it comes due. The higher the result of times interest earned the easier it is for the company to pay their interest.

The debt-to-equity ratio of Company Q is very low while its credit rating is high. The relationship of the company with current suppliers is excellent, but raw materials are also sourced from other suppliers.

3. What is the financial risk of the company (the LT debt to total capitalization ratio)?

Another factor we need to look at in our comparison is long-term debt and leverage. Times interest earned, debt to debt + equity ratio, and debt to total assets ratio are the focus of long-term debt and leverage. Times interest earned provides the relationship between the companies’s earning to cover interest payment and also ability to take in more debt. In calculations above, both companies are capable of paying back interest payments and take more debts. However, Boeing has higher ability to take in more debt and pay back interests comparing to Lockheed Martin. By further examine the long-term debt and leverage, debt to debt + equity and debt to total asset ratios must also be assess. These ratios will provide a comparison on the amount

Return on Total Assets was 4.43% which is below five percent. That indicates that the company is not accurately converting its assets into profit. The total for Return on Stockholders’ Equity was 8.89%, however financial analysts prefer ROE to range between 15-20 %. The company’s low ROE indicates that the company is not generating profit with new investments. Lastly, Debt-to-Equity ratio for the company was 1.01 which indicates that investors and creditors are equally sharing assets. In the view of creditors, they see a high ratio as a risk factor because it can indicate that investors are not investing due to the company’s overall performance. The totals of these three ratios demonstrate that the company’s financial state is not as healthy as it should be.

We defined several criteria to determine our choice – return, risks and other quantitative and qualitative factors. Targeting a debt ratio of 40% will maximize the firm’s value. A higher earning’s per share and dividends per share will lead to a higher stock price in the future. Due to leveraging, return on equity is higher because debt is the major

In this paper we’re going to look at the financial operations of a business using ratios and analyzing the balance sheet of a health care organization. What are ratios? What are current, quick, and debt-to-net-worth ratios?

Also, according to its leverage ratios, the company’s debts are not only very high, but are also increasing. Its decreasing TIE ratio indicates that its capability to pay interests is decreasing. The company’s efficiency ratios indicate that despite the fact that its fixed assets are increasingly being utilized to generate sales during the years 1990-1991 as indicated by its increasing fixed asset turnover ratio, the decreasing total assets turnover indicate that overall the company’s total assets are not efficiently being put to use. Thus, as a whole its asset management is becoming less efficient. Last but not the least, based on its profitability ratios, the company’s ability to make profit is decreasing.

As we can observe from the chart above, we notice that Caterpillar is having issues with its Debt to equity ratio, because it has more debt for earnings than the industrial average, even though, is the biggest company on this sector and the leader, the decrease on its revenues due the low oil prices and the little growth on the world economy.

Apple is still the world's largest company financially according to Google’s recent earnings report. Apple has a $521.3 billion market funding, as of Feb. 5, 2016. Now, I will like to analyze the importance of Apple debt ratios. Apple increases its capital return program in 2015 with the hopes of returning $200 billion to its investors by March 2017, from that Apple’s debt offerings is now over $55 billion as of September 2015. Appropriate measurements in finding Apple's debt include the debt-to-equity, debt, cash flow-to-debt and capitalization ratios. The debt ratio indicates a company's degree of advantage, which is calculated by dividing its total debt by its total assets during an accounting period. A high debt to equity ratio

The long-term liquidity risk ratio such as LT debt/Equity, D/E, and Total Liabilities to Total Assets all show a decline from year 2005 due to the repayment of debts. The interest coverage ratio also shows a healthy number of 29.45 in comparison to the industrial average of 15.04 indicating a high ability to pay out its interest expense. Such a low relative risk is not surprising due to the nature of its business depending heavily in R&D development and large intangible assets.