   Chapter 9, Problem 89E ### Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

#### Solutions ### Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
54 views

# Ratio AnalysisRising Stars Academy provided the following information on its 2019 balance sheet and state mcnt of cash flows: Long-term debt S 4,400 Interest expense S 398 Total liabilities 8,972 Net income 559 Total assets 38,775 Interest payments 432 Total equity 29,803 Cash flows from operations 1.015 Operating income 1.223 Income tax expenses 266 Income taxes paid 150 Required: Calculate the following ratios for Rising Stars: (a) debt to equity, (b) debt to total assets, (c) long-term debt to equity, (d) times interest earned (accrual basis), and (e) times interest earned (cash basis). (Note: Round answers to three decimal places.) CONCEPTUAL CONNECTION Interpret these results. 3.What does it mean if a bond is “callable’

To determine

(a)

Introduction:

Debt to equity ratio gives the firm valuation of its finances. It shows the ratio of debt financing of the company to its equity financing.

To calculate:

Debt to equity ratio.

Explanation

Debt to Equity Ratio = Total DebtTotal Equity

Wherein,

Total debts = $8,972 Total Equity =$29,803

Debt t

To determine

(b)

Introduction:

Debt to total assets is a financial ratio that shows what part of asset is financed using its debt (liabilities).

To calculate:

Debt to total assets.

To determine

(c)

Introduction:

Long Debt to equity ratio gives the firm valuation of its finances. It shows compares the ratio financing through long term liability and equity of the company.

To calculate:

Long term debt to equity.

To determine

(d)

Introduction:

Times Interest Earned can either be on accrual basis of interest expense or cash basis of interest payment measured with respect to pretax income as interest is tax deductible.

To calculate:

Times Interest Earned (Accrual basis).

To determine

(e)

Introduction:

Times Interest Earned can either be on accrual basis of interest expense or cash basis of interest payment measured with respect to pretax income as interest is tax deductible.

To calculate:

Times Interest Earned (Cash basis).

To determine

(b)

Introduction:

Times Interest Earned can either be on accrual basis of interest expense or cash basis of interest payment measured with respect to pretax income as interest is tax deductible.

To interpret:

The result of calculated ratios.

### Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

#### The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

#### Find more solutions based on key concepts

Database Systems: Design, Implementation, & Management

#### Define the swing and the bed length of a lathe.

Precision Machining Technology (MindTap Course List)

#### How has the proliferation of mobile devices affected IT professionals?

Systems Analysis and Design (Shelly Cashman Series) (MindTap Course List)

#### Who might use a workstation?

Enhanced Discovering Computers 2017 (Shelly Cashman Series) (MindTap Course List) 