Practice - Solvency Ratios (Leverage Ratios)
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Practice Questions
Test your understanding with targeted questions
What is the Debt-to-Equity ratio if total debt is $500,000 and shareholders' equity is $250,000?
💡 Hint: Total debt divided by shareholders' equity.
If a company has EBIT of $60,000 and interest expense of $10,000, what is the Interest Coverage ratio?
💡 Hint: EBIT divided by interest expense.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What does a high Debt-to-Equity ratio indicate?
💡 Hint: Think about how debt impacts financial stability.
True or False: A higher Interest Coverage ratio suggests a company has a better ability to meet its debt obligations.
💡 Hint: Consider how EBIT relates to interest expenses.
1 more question available
Challenge Problems
Push your limits with advanced challenges
A tech startup has $600,000 in total debt and $200,000 in equity. What is their Debt-to-Equity ratio, and what does this imply about their financial leverage?
💡 Hint: Calculate total debt divided by equity.
If a firm has an EBIT of $250,000 and interest expenses of $75,000, calculate the Interest Coverage ratio and discuss its potential implications for investors.
💡 Hint: Divide EBIT by interest expenses for the ratio.
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