You Have Been Asked to Evaluate the Long-Term Borrowing Position

You have been asked to evaluate the long-term borrowing position of Client,Inc.However,you were given only the following limited information. $\begin{array}{lr}\text { Bonds payable, 12\% } & \$ 1,000,000 \\\text { Stockholders' equity } & 1,800,000 \\\text { Current assets } & 1,870,000 \\\text { Tangible assets, net } & 1,600,000 \\\text { Intangible assets } & 40,000 \\\text { Investments } & 120,000 \\\text { Other assets } & 90,000 \\\text { Sales } & 4,000,000 \\\text { Operating expenses } & 3,620,000\end{array}$

Required:
Assuming that this is the only information you will receive,estimate the following ratios:
a.Times interest earned ratio
b.Debt ratio
c.Debt/equity ratio
d.Debt to tangible net worth ratio

Correct Answer:

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