Mr.Jones has asked you to advise him of the long-term debt position of Dryden Corporation.He provides you with the ratios indicated below. $\begin{array}{ccc}
&\underline{2010} &\underline{2011} & \underline{2012} \
\text {Fixed Charge Coverage}&6.3&6.0&5.3\
\text {Times Interest Earned}&8.2 & 6.0 & 5.3 \
\text {Debt Ratio}&40\%& 39\% & 40\% \
\text {Debt to Tangible Net Worth}&80\% & 81\% & 84\%
\end{array}$
Required:
Give the implications and limitations of each item separately and then the collective inference one may draw about Dryden's long-term,debt-paying ability.

Question

Mr.Jones has asked you to advise him of the long-term debt position of Dryden Corporation.He provides you with the ratios indicated below. $\begin{array}{ccc}
&\underline{2010} &\underline{2011} & \underline{2012} \
 \text {Fixed Charge Coverage}&6.3&6.0&5.3\
 \text {Times Interest Earned}&8.2 & 6.0 & 5.3 \
 \text {Debt Ratio}&40\%& 39\% & 40\% \
 \text {Debt to Tangible Net Worth}&80\% & 81\% & 84\%
\end{array}$  
Required:
Give the implications and limitations of each item separately and then the collective inference one may draw about Dryden's long-term,debt-paying ability.

Quizplus · Accepted Answer

The Answer of Mr.Jones has asked you to advise him of the long-term debt position of Dryden Corporation.He provides you with the ratios indicated below. $\begin{array}{ccc}
&\underline{2010} &\underline{2011} & \underline{2012} \
 \text {Fixed Charge Coverage}&6.3&6.0&5.3\
 \text {Times Interest Earned}&8.2 & 6.0 & 5.3 \
 \text {Debt Ratio}&40\%& 39\% & 40\% \
 \text {Debt to Tangible Net Worth}&80\% & 81\% & 84\%
\end{array}$  
Required:
Give the implications and limitations of each item separately and then the collective inference one may draw about Dryden's long-term,debt-paying ability.

MrJones Has Asked You to Advise Him of the Long-Term