F. in late 2010 hca announced an intended dividend recapitalization in which it would pay a $2 billion dividend to shareholders
financed in large part by a $1.53 billion bond offering. at an interest rate of 6 percent, how would the added debt have affected hca's times-interest-earned ratio in 2009?
The times interest earned ratio is a ratio that looks at how many times a companies earnings from operations can cover the loan interest it has to pay in a year.
It is calculated by the formula Earnings Before Interest and Tax divided by the interest expense.
Therefore looking at the scenario, if HCA increases its debt level by issuing a $1.53 billion bond, this will increase its interest expense significantly and the number of times its earnings will cover its interest expense will be remarkably lower.
Therefore the times interest earned ratio will reduce
The real exchange rate is 1 dollar = 2 Argentine pesos
The exchange rate is an economic term to refer to the relationship between two currencies. The exchange rate establishes the proportion of value that exists between two currencies. For example:
1 Dollar is equivalent to 4 Argentine pesos
However, this rate does not represent reality in some places, there may be situations in which the proportions established by the exchange rate are not faithful to reality. For example:
3 Dollars or 6 Argentine pesos are used to buy 1 gallon of milk.
In this example, it is evident that in reality, the dollar is not equivalent to 4 Argentine pesos but to 2 due to the proportion of value concerning a product. Therefore, the real exchange rate is 2 Argentine pesos for every American dollar.