Coverage ratios: Measures of the degree of protection for LT creditors/Investors Flashcards
1
Q
Debt to Equity
A
Total Debt/ SE
Shows creditors the Co. ability to sustain losses
2
Q
Debt to total assets
A
Total Debt / Total Assets
Measures the percentage of total assets provided by creditors
3
Q
Times Interst earned
A
Inc before interest expense and taxes / Interest expense
Measures ability to meet interest pmts as they come due
4
Q
Cash debt coverage Ratio
A
Net cash provided by operating activities / Avg Total Liabilities
Measures a company’s ability to repay its total liabilities in a given year from its operations
5
Q
Book value per share
A
Common SE / Outstanding shares
Measures the amt each share would receive if the Co. were liquidated at the amts reported on the BS
