Homework SourseA Ratios Using the data provided below calculate the Interes
A. Ratios Using the data provided below calculate the Interest Burden ratio.
53%
56%
44%
51%
B.
Ratios Using the data provided below calculate the Operating Profit Margin ratio.
42%
34%
37%
40%
C.
Ratios Using the data provided below calculate the Debt to Equity Ratio.
2.25
0.25
1.25
3.25
| Sales | $ | 133 | (mill) |
| EBIT | $ | 50 | |
| Interest Expense | $ | 22 | |
| Assets | $ | 107 | |
| Equity | $ | 31 | |
| Net Profit | $ | 23 | |
Solution
1. Option C.
Interest Burden Ratio = Interest Expense / EBIT = $22 M / $50 M = 44%
2. Option B
Operating Profit Margin = EBIT / Sales = $46 M / $135 M = 34%
3. Option A
Debt to Equity Ratio = (Total Assets - Equity) / Equity = ($130 - $40) / $40 = 2.25
