Financial ratio analysis for BC Corporation
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In the attached files are a listing of ratios to be prepared, and financial statement information for BC Corporation.
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See the ratio analysis in the attached Excel file.
? The bank that financed BC's note payable
The bank would be interested in knowing the financial position of the company especially the ratios that suggest the loan paying and loan servicing ability of the company. These parameters are indicated by cash to debt coverage, debt to total assets and times interest earned. The cash to debt coverage provides the bank an idea of the amount of cash generated by operations that are available to service and repay the debt. The ratio has improved from 0.10 in the previous year to 0.26 in the current year, a good sign. The debt to total assets ratio indicates the company's financial risk by determining how much of the company's assets have been financed by debt. It also indicates the assets available to cover the debt of the company. Lower the ratio, the better it is. The debt to total asset has declined from 0.55 in the previous year to 0.48 in the current year. It indicates that the company has more assets to cover its liabilities than in the previous year. The times interest earned measures the company's ability to generate ...
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