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According to the information in the table below, which of the following shows Debt/Equity (D/E) ratio and Interest Coverage ratio (ICR) correctly.   Long Term Debt         50,000 EBIT(Operating profit)         75,000 Shareholders' Equity         40,000 Interest expenses         15,000 Total Assets       140,000

According to the information in the table below, which of the following shows Debt/Equity (D/E) ratio and Interest Coverage ratio (ICR) correctly.   Long Term Debt         50,000 EBIT(Operating profit)         75,000 Shareholders' Equity         40,000 Interest expenses         15,000 Total Assets       140,000

EBK CFIN
EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter12: Capital Structure
Section: Chapter Questions
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According to the information in the table below, which of the following shows Debt/Equity (D/E) ratio and Interest Coverage ratio (ICR) correctly.

 

Long Term Debt         50,000
EBIT(Operating profit)         75,000
Shareholders' Equity         40,000
Interest expenses         15,000
Total Assets       140,000


 

Select one:
a. D/E= 1.25% and ICR=5%
b. D/E=1.25 and ICR=3.3 times
c. D/E=1.25 and ICR=5 times
d. D/E=0.80 and ICR=2.5 times
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