The following information was available for the year ended December 31, 2019:
$$\begin{array} { l r }
\text { Earnings before interest and taxes (operating income) } & \$ 9 7 , 5 0 0 \
\text { Interest expense } & 15,000 \
\text { Income tax expense } & 22,500 \
\text { Net incorne } & 60,000 \
\text { Total assets at year-end } & 288,000 \
\text { Total liabilities at year-end } & 216,000
\end{array}$$ Required:
(a.)Calculate the debt ratio at December 31, 2019.
(b.)Calculate the debt/equity ratio at December 31, 2019.
(c.)Calculate the times interest earned for the year ended December 31, 2019.

Question

The following information was available for the year ended December 31, 2019:
 $$\begin{array} { l r } 
\text { Earnings before interest and taxes (operating income) } & \$ 9 7 , 5 0 0  \
\text { Interest expense } & 15,000 \
\text { Income tax expense } & 22,500 \
\text { Net incorne } & 60,000 \
\text { Total assets at year-end } & 288,000 \
\text { Total liabilities at year-end } & 216,000
\end{array}$$ Required:
(a.)Calculate the debt ratio at December 31, 2019.
(b.)Calculate the debt/equity ratio at December 31, 2019.
(c.)Calculate the times interest earned for the year ended December 31, 2019.

Quizplus · Accepted Answer

The Answer of The following information was available for the year ended December 31, 2019:
 $$\begin{array} { l r } 
\text { Earnings before interest and taxes (operating income) } & \$ 9 7 , 5 0 0  \
\text { Interest expense } & 15,000 \
\text { Income tax expense } & 22,500 \
\text { Net incorne } & 60,000 \
\text { Total assets at year-end } & 288,000 \
\text { Total liabilities at year-end } & 216,000
\end{array}$$ Required:
(a.)Calculate the debt ratio at December 31, 2019.
(b.)Calculate the debt/equity ratio at December 31, 2019.
(c.)Calculate the times interest earned for the year ended December 31, 2019.

The Following Information Was Available for the Year Ended December