(a)
Introduction:
Accounting ratios are used to evaluate the financial performance of the business organisation
Debit ratio:
It measures the extents of company's leverage. It can be interpreted as proportion of company's assets financed by debts. It can be calculated by
To calculate:
Debit ratio of both the companies.
(b)
Concept Introduction:
Ratio of liabilities to shareholders' equity or debt to equity ratio: is used to evaluate company's financial leverage, it reflects the ability of shareholders equity to cover all outstanding debts.it can be calculated as follows.
To calculate:
Debt to equity ratio both the companies.
(c)
Concept Introduction:
Time interest earned TIE :
It is a matric used to measure a company's ability to meet debit obligation it can be calculated using following formula.
To calculate:
Time interest earned for both the companies.
(d)
Introduction:
Accounting ratios are used to evaluate the financial performance of the business organisation
Solvency analysis:
Solvency analysis is used to evaluate companies' ability to pay its long-term debt, it also helps owner to determine the chances of firm's long-term survival, some of the ratios used for solvency analysis are as follows
To Interpret:
Ratio difference between both the companies.
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Survey of Accounting (Accounting I)
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