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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Mr. Parks has asked you to advise him on the long-term debt-paying ability of Arodex Company. He provides you with the following ratios:
| Â |
2009 |
2008 |
1 |
|
Times interest earned |
8.2 |
6 |
5.5 |
|
Debt ratio |
40% |
39% |
40% |
|
Debt to tangible net worth |
80% |
81% |
81% |
Required
a. Give the implications and the limitations of each item separately and then the collective influence that could be drawn from them about Arodex Company’s long-term debt position.
b. What warnings should you offer Mr. Parks about the limitations of ratio analysis for the purpose stated here?
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