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    Are ratios that Bankers and Bondholders want similar if so why

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    Please comment for the following questions:

    1. Are ratios that Bankers and Bondholders want similar if so why?
    2. Are common sized trend income statements more valuable for a review than a single period; if so why?
    3. If you identify an unusual item based upon % what should you do?

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    Solution Preview

    1. Are ratios that Bankers and Bondholders want similar if so why?
    Yes ratios like Debt-to-equity ratio = long-term debt/total equity is similar for Bankers and Bond holders because they both are lenders. Through Debt equity ratio one can judge the solvency of the organization. As a rule of thumb, a high debt-to-equity ratio means a firm is more capital-intensive, with all the risks that entails. If this number is high, the company may want to look for ways to cut the debt load. Highly leveraged companies are usually more vulnerable to business downturns than those with lower debt-to equity ratios.
    Another common ratio is Interest coverage /Times interest earned ...

    Solution Summary

    The expert determines if ratios for Bankers and Bondholders want similar.

    $2.19

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