answer the multiple choice quesn 15.2% to 32%. Its return on equity ts times int
ID: 2653569 • Letter: A
Question
answer the multiple choice quesn 15.2% to 32%. Its return on equity ts times interest earned ratio has t statement to describe the company? 24) The company's leverage ratio has moved from, 15.2%to ratio has also moved up, from 20.5% to 45.3%. itsu dropped to 3.5. Which of the following is the best stat A) Is not in a risky financial position B) Is depending on debt to finance its expansion C) Cannot pay the interest on its long-term debt D) Is depending on equity to finance its expansion E) Has a sizable cushion to pa y the interest on its debt ratio of 16Explanation / Answer
Company's Leverage ratio increased means its Fixed cost increased as compared to total cost. On the other hand return on equity has been increased as indicated in the increased return ratio. However its reduced times interest ratio indicates that company increaced its Debt capital (formula is Time interest ratio = EBIT/Interest for the period).
Which means company depends too much on its debt capital.
Answer is B.
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