what does the following ratios over a period of three years indicate? 1) total debt ratio indicate 2016 -...

90.2K

Verified Solution

Question

Finance

what does the following ratios over a period of three yearsindicate?

1)total debt ratio indicate

2016 - 1.02
2017- 0.97
2018 - 0.96

2) long term debt ratio

2016 - 0.47
2017 - 0.53
2018 - 0.51

3) operation cash flow ratio

2016 - 0.82
2017 - 0.76
2018 - 0.68

4) interest coverage ratio

2016 - 3.77
2017 - 3.49
2018 - 5.06

5) quick ratio

2016 - 0.93
2017 - 1.20
2018 - 1.17

Answer & Explanation Solved by verified expert

3.9 Ratings (466 Votes)

1 Total debt ratio Meaning Debt Ratio is defined as the Total Debt in proportion to Total Assets It is a measure of the companys leverage and is expressed in the percentage format The ratio is calculated by dividing Total Debt by Total Assets A ratio of greater than 1 indicates that the company is using a lot of its assets to fund its debt Indication The given figures indicate that the company has had a very high Debt Ratio over all the years In 2018 the companys Debt was 96 of its Total Assets A super majority of the Total Assets are being used to fund Debt which is a bad sign Even though the ratio shows a deceasing trend in the Debt as a proportion of Total Assets the company is at an risky position relating to its survival 2 Long term debt ratio See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member