Use the following ratios from Walmart, Target, and Dollar General to answer Questions 12-13.RatioLiabilities-to-equity ratioTimes interest earnedCash from operations to totaldebtWalmart1.24611.490.787TargetO TargetO WalmartO This cannot be determined based on the information givenO Dollar General1.27515.110.447Dollar General1.177.850.974Based on the information given, which of the three companies is better able to cover its interest expense with current income?3.33 pts

The Times Interest Earned (TIE) ratio, also known as the Interest Coverage Ratio, is a financial…

Use the following ratios from Walmart, Target, and Dollar General to answer Questions 12-13. Ratio Liabilities-to-equity ratio Times interest earned Cash from operations to total debt Target Walmart Walmart 1.246 11.49 0.787 Target This cannot be determined based on the information given O Dollar General 1.275 15.11 0.447 Dollar General 1.17 Based on the information given, which of the three companies is better able to cover its interest expense with current income? 7.85 0.974

Use the following ratios from Walmart, Target, and Dollar General to answer Questions 12-13. Ratio Liabilities-to-equity ratio Times interest earned Cash from operations to total debt Target Walmart Walmart 1.246 11.49 0.787 Target This cannot be determined based on the information given O Dollar General 1.275 15.11 0.447 Dollar General 1.17 Based on the information given, which of the three companies is better able to cover its interest expense with current income? 7.85 0.974

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)

22nd Edition

ISBN:9781305666160

Author:James A. Heintz, Robert W. Parry

Publisher:James A. Heintz, Robert W. Parry

Chapter15: Financial Statements And Year-end Accounting For A Merchandising Business

Section: Chapter Questions

Problem 4CE

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Methodology:• Based on the above information the consulting group will conduct ratio analysis for the following ratios:o Current ratio o Receivable’s turnover o Times’s interest earned o Profit margin o Days in inventory o Return on assets o Cash current debt coverage ratio • As a next step the group will compare the ratios calculated above with industry benchmarks. The benchmarks are indicated within brackets besides each ratio.o Current ratio (3 to 1) o Receivable’s turnover (13 times) o Times’s interest earned (9 times) o Profit margin (12%) o Days in inventory (50 days) o Return on assets (12%) o Cash current debt coverage ratio (2 times
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