SURVEY OF ACCOUNTING-ACCESS
4th Edition
ISBN: 9780077631536
Author: Thomas Edmonds
Publisher: McGraw-Hill Education
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Chapter 9, Problem 8Q
To determine
State the ratios that are used to measure long-term, debt-paying ability of a company and state the manner of calculating those ratios.
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Which one of the following is the best indicator of long-term debt paying ability?
A)Working capital turnover.
B)Asset turnover.
C)Current ratio.
D)Debt to total assets ratio.
4. Explain or illustrate before-tax cost of debt and after-tax cost of debt.
5. What are the relationships between: a) interest rate and cost of debt; b) default risk and cost of debt; and c) bond rates and interest rates?
6. What is the difference between yield to maturity on outstanding debt and coupon rate? Which is a better measure of cost of debt between the two?
7. How is COST OF preferred equity computed?
Illustrate how the debt-to-equity ratio (total debt over total equity)(distinct from the debt ratio) impacts the return on equity?
Chapter 9 Solutions
SURVEY OF ACCOUNTING-ACCESS
Ch. 9 - 1. Why are ratios and trends used in financial...Ch. 9 - Prob. 2QCh. 9 - Prob. 3QCh. 9 - 4. What is the significance of inventory turnover,...Ch. 9 - 5. What is the difference between the current...Ch. 9 - Prob. 6QCh. 9 - Prob. 7QCh. 9 - Prob. 8QCh. 9 - 9. What are some limitations of the earnings per...Ch. 9 - Prob. 10Q
Ch. 9 - Prob. 11QCh. 9 - Prob. 12QCh. 9 - Prob. 13QCh. 9 - Prob. 14QCh. 9 - Prob. 1ECh. 9 - Prob. 2ECh. 9 - Prob. 3ECh. 9 - Prob. 4ECh. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Prob. 9ECh. 9 - Prob. 10ECh. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - LO 13-2, 13-3, 13-4, 13-5 Exercise 13-15A...Ch. 9 - Prob. 16PCh. 9 - Prob. 17PCh. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 21PCh. 9 - Prob. 22PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Prob. 1ATCCh. 9 - ATC 9-5 Ethical Dilemma Making the ratios look...
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- Calculate the projected debt ratio, debt-to-equity ratio, liabilities-to-assets ratio, times-interest-earned ratio, and EBITDA coverage ratios. How does Computron compare with the industry with respect to financial leverage? What can you conclude from these ratios?arrow_forwardHow to do calculate good debt percentage as well as net return percentage with the data above?Please explain the formula used in calculating good debt percentage as well as net return percentage.arrow_forwardWhich one of the following ratios is relevant to assess long-term solvency? A. Current Ratio B. Debt-Service Coverage Ratio C. Return on Equity D. Profit Marginarrow_forward
- what is the meaning of debt-to-asset ratio?arrow_forwardWhat does the debt to equity ratio show, and how is it calculated?arrow_forward4. Explain or illustrate before-tax cost of debt and after-tax cost of debt. 5. What are the relationships between: a) interest rate and cost of debt; b) default risk and cost of debt; and c) bond rates and interest rates?arrow_forward
- Which of the following is NOT a possible measure of debt capacity? Group of answer choices Debt Outstanding ratio Debt service ratio Debt outstanding per capita Operating ratioarrow_forwardShow the calculation of the following solvency ratios: (1) the debt to equity ratio, and (2) the times interest earned ratio.arrow_forwardWhat is the significance of a debt coverage ratio?arrow_forward
- What are the importance of the following financial ratios? Quick ratio. Debt to equity ratio. Working capital ratio.arrow_forwardWhat are the advantages and disadvantages of short-term versus long-term debt asidentified in this section?arrow_forwardState the significance and method of Debt to Equity ratio.arrow_forward
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