A lender would prefer a borrower have which one of the following sets of ratios?

Question

A lender would prefer a borrower have which one of the following sets of ratios?

equity multiplier = 0.9; total debt ratio = 1.1

times interest earned = 2.0; debt-equity ratio 3.5

times interest earned = 0.5; debt-equity ratio = 1.3

cash coverage ratio = 3.4; debt-equity ratio = 0.4

cash coverage ratio = 0.8; debt-equity ratio = 1.6

equity multiplier = 0.9; total debt ratio = 1.1

times interest earned = 2.0; debt-equity ratio 3.5

times interest earned = 0.5; debt-equity ratio = 1.3

cash coverage ratio = 3.4; debt-equity ratio = 0.4

cash coverage ratio = 0.8; debt-equity ratio = 1.6

Explanation / Answer

cash coverage ratio = 3.4; debt-equity ratio = 0.4

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