Chapter 3, Problem 24P

a.

Summary Introduction

To calculate: The times interest earned ratio (interest coverage ratio) for Times Mirror and Glass Co.

Introduction:

Timesinterestearned ratio:

It is the ratio that is used for the measurement of the efficiency of a firm to meet its debt obligations based on the current income of the firm.

b.

Summary Introduction

To calculate: The fixed charge coverage ratio for Times Mirror and Glass Co.

Introduction:

Fixed charge coverage ratio:

It is the ratio which helps in determining a firm’s ability to pay off its fixed expenses from its income before interest and taxes.

c.

Summary Introduction

To calculate: The profit margin of Times Mirror and Glass Co.

Introduction:

Profit Margin:

It is the percentage that indicates the profitability of the firm during a specified period. It is also termed return on sales.

d.

Summary Introduction

To calculate: The total assets turnover of Times Mirror and Glass Co.

Introduction:

Asset turnover:

It computes the competence of a firm to use its assets to generate the income or sales revenue for the firm. It is computed by dividing the sales or revenue of the firm to its total assets.

e.

Summary Introduction

To calculate: The return on assets for Times Mirror and Glass Co.

Introduction:

Return on assets:

It is the financial ratio that shows the profitability of the firm in relation to the usage of resources. It can be computed by dividing a corporation’s net income to its total assets.