Debt Ratio, Current Ratio, Times Interest Earned Ratio
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10. As a short-term creditor concerned with a company's ability to meet it's financial
Obligation to you, which one of the following combinations of ratios would you
Most likely prefer?
Debt ratio Current ratio Time interest earned
a. 0.33 0.5 0.5
b. 0.50 1.0 1.0
c. 0.50 1.5 1.5
d. 0.67 2.0 1.0
e. 0.71 2.5 0.5
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This provides the steps to calculate the Debt Ratio, Current Ratio, Times Interest Earned Ratio
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In financial analysis, we need qualitative information and try to read between the numbers. We have to ask all the right questions. Over the years, there are some ratios, which have become more popular and handy for rule of thumb analysis of financial statements. Our purpose in this note is not deride them but to advice the reader to use them ...
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