what does the following ratios over a period of three years
indicate?
1)
total debt ratio indicate
2016 -...
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Finance
what does the following ratios over a period of three yearsindicate?
1)total debt ratio indicate
2016 - 1.02
2017- 0.97
2018 - 0.96
2) long term debt ratio
2016 - 0.47
2017 - 0.53
2018 - 0.51
3) operation cash flow ratio
2016 - 0.82
2017 - 0.76
2018 - 0.68
4) interest coverage ratio
2016 - 3.77
2017 - 3.49
2018 - 5.06
5) quick ratio
2016 - 0.93
2017 - 1.20
2018 - 1.17
Answer & Explanation
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1 Total debt ratio Meaning Debt Ratio is defined as the Total Debt in proportion to Total Assets It is a measure of the companys leverage and is expressed in the percentage format The ratio is calculated by dividing Total Debt by Total Assets A ratio of greater than 1 indicates that the company is using a lot of its assets to fund its debt Indication The given figures indicate that the company has had a very high Debt Ratio over all the years In 2018 the companys Debt was 96 of its Total Assets A super majority of the Total Assets are being used to fund Debt which is a bad sign Even though the ratio shows a deceasing trend in the Debt as a proportion of Total Assets the company is at an risky position relating to its survival 2 Long term debt ratio
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