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Assoli18 [71]
3 years ago
9

The following information was available for the year ended December 31, 2019: Earnings before interest and taxes (operating inco

me) $ 75,000 Interest expense 15,000 Income tax expense 20,000 Net income 40,000 Total assets at year-end 250,000 Total liabilities at year-end 140,000 Required: Calculate the debt ratio at December 31, 2019. (Round your answer to 1 decimal place.) Calculate the debt/equity ratio at December 31, 2019. (Round your answer to 2 decimal places.) Calculate the times interest earned for the year ended December 31, 2019. (Round your answer to 2 decimal places.)
Business
1 answer:
Charra [1.4K]3 years ago
6 0

Answer:

Debt ratio = 56%

Times Interest earned = 5 times

Explanation:

<em>The debt ratio is the proportion of the total assets amount that is financed by debt . It is a measure of financial risk. A company with a high debt ratio (in excess of 50%) is considered financially risky. That is may not be able to meet its short term financial obligations</em>

Debt ratio = Debt/Total assets × 100

              = (140,000/250,000)× 100

              = 56%

Times interest earned is the number of times the earning before interest and taxes (EBIT) can pay the interest obligation. It is a measure of financial risk. For example, a company with a ratio of less than 3 times might be considered as potentially unable to meets its loan obligation

Times interest earned = Earnings before interest and tax (EBIT)/Interest expense

= 75,000/15,000

= 5 times.

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Customers whose demand has a higher degree of price elasticity will pay less.

<h3>How Does Price Discrimination Occur and types of Price Discrimination?</h3>

Price discrimination is a marketing tactic where sellers charge clients various prices for the same good or service depending on what they believe will win the customer over. A merchant that practices pure price discrimination will impose the highest price possible on each customer. The more typical types of price discrimination involve the vendor classifying clients into groups according to particular characteristics and charging each group a different price.

There are three types of price discrimination:

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8 0
2 years ago
An investment of $6,000 produces a net annual cash inflow of $2,000 for each of 5 years. What is the payback period? a.2 years b
mestny [16]

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I hope my answer helps you

4 0
3 years ago
Hakim set goals for his store that included satisfying his customers while making enough money to open a second store. Which com
anyanavicka [17]

Hakim Goals

Explanation:

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1.Hakim didn't leave anything out.

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Answer:

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hence, the same would be relevant

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In order to break even, your minimum selling price must be __________ your variable costs.
vovikov84 [41]
The answer to your question is c

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