Evaluating the ability to pay long-term debt Flashcards
1
Q
What’s the computation for Debt Ratio?
A
Total liabilities/Total assets
2
Q
What’s the computation for Debt to Equity Ratio?
A
Total liabilities/Total equity
3
Q
What’s the computation for Times-Interest-Earned Ratio?
A
Net income + income tax expenses + interest expenses / interest expense
