A Toronto banker considering loaning money to a ﬁrm for ten years would most likely prefer the ﬁrm have a debt ratio of _____ and a times interest earned ratio of _____.
A) .75; .75
B) .50; 1.00
C) .45; 1.75
D) .40; 2.50
E) .35; 3.00

Question

Quizplus · Accepted Answer

A banker would prefer a lower debt ratio and a higher times interest earned ratio, indicating the firm is less leveraged and has a strong ability to cover its interest obligations.

A Toronto Banker Considering Loaning Money to a ﬁRm for Ten