Calculate financial leverage measures The following information was available for the year ended December 31, 2013:
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Earnings before interest and taxes (operating income)
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$60,000
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Net income
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$ 35,000
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Total assets at year-end
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200,000
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Interest expense
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10,000
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Total liabilities at year-end
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120,000
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Income tax expense
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15,000
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Required:
a. Calculate the debt ratio at December 31, 2013.
b. Calculate the debt/equity ratio at December 31, 2013.
c. Calculate the times interest earned for the year ended December 31, 2013.