Ratio Analysis Paper 8

1

Which one of the following is the best indicator of long-term debt paying ability?






2

The following information has been derived from the financial statements of Boutwell Company: Current assets $640,000 Total assets 990,000 Long-term liabilities 130,000 Current ratio 3.2 The company’s debt to equity ratio is






3

The interest expense for a company is equal to its earnings before interest and taxes (EBIT). The company’s tax rate is 40%. The company’s times interest earned ratio is equal to






4

A company has interest expense of $4 million, sales revenue of $50 million, earnings before interest and taxes of $20 million, and an income tax rate of 35%. This company has a times-interest-earned ratio of






5

The degree of operating leverage (DOL) is






6

For a firm with a degree of operating leverage of 3.5, an increase in sales of 6% will






7

This year, Nelson Industries increased earnings before interest and taxes (EBIT) by 17%. During the same period, net income after tax increased by 42%. The degree of financial leverage that existed during the year is






8

A firm with a higher degree of operating leverage when compared to the industry average implies that the






9

A degree of operating leverage of 3 at 5,000 units means that a






10

Firms with high degrees of financial leverage would be best characterized as having






Result

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