Calculate financial leverage measures The following information was available for the year ended December 31,...
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Accounting
Calculate financial leverage measures The following information was available for the year ended December 31, 2016:
| Earnings before interest and taxes (operating income) | $120,000 |
| Interest expense | 20,000 |
| Income tax expense | 30,000 |
| Net income | 70,000 |
| Total assets at year-end | 400,000 |
| Total liabilities at year-end | 240,000 |
Required:
Calculate the debt ratio at December 31, 2016.
Calculate the debt/equity ratio at December 31, 2016.
Calculate the times interest earned for the year ended December 31, 2016.
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