Use Tableau to calculate and display the trends for the debt to equity and times interest earned ratios for each of the two companies in the period 2018-2021. the average debt to equity ratio and times interest earned ratio for companies in the General Retailers industry sector in a comparable time period are 1.92 and 10.6, respectively. 1. Other things being equal, do both companies appear to have the ability to meet their obligations as measured by the debt to equity ratio?   2. Based solely on the times interest earned ratios, do you reach the same conclusion as in Requirement 1?   3. Is the margin of safety provided to creditors by Discount Goods improving or declining in recent years as measured by the average times interest earned ratio?

Survey of Accounting (Accounting I)
8th Edition
ISBN:9781305961883
Author:Carl Warren
Publisher:Carl Warren
Chapter15: Capital Investment Analysis
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Use Tableau to calculate and display the trends for the debt to equity and times interest earned ratios for each of the two companies in the period 2018-2021. the average debt to equity ratio and times interest earned ratio for companies in the General Retailers industry sector in a comparable time period are 1.92 and 10.6, respectively.


1. Other things being equal, do both companies appear to have the ability to meet their obligations as measured by the debt to equity ratio?

 

2. Based solely on the times interest earned ratios, do you reach the same conclusion as in Requirement 1?

 

3. Is the margin of safety provided to creditors by Discount Goods improving or declining in recent years as measured by the average times interest earned ratio?

long term solvency debt to equity ratio
Company / Year
Big Store
Discount Goods
2.0
1.9017
1.9
1.8220
1.8
1.7
1.6783
1.6732
1.6
1.5841
1.4907
1.5
1.4296
1.4119
1.4
1.3
1.2
1.1
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
2018
2019
2020
2021
2018
2019
2020
2021
Debt to equity Ratio
Transcribed Image Text:long term solvency debt to equity ratio Company / Year Big Store Discount Goods 2.0 1.9017 1.9 1.8220 1.8 1.7 1.6783 1.6732 1.6 1.5841 1.4907 1.5 1.4296 1.4119 1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.0 2018 2019 2020 2021 2018 2019 2020 2021 Debt to equity Ratio
Long term solvency times interest earned ratio
Company
Big Store
Discount Goods
15
14.50
14
13
12.69
12
10.93
11
10.71
10
5.37
4.96
4.84
4.42
4
3
2
Times interest earned ratio
Transcribed Image Text:Long term solvency times interest earned ratio Company Big Store Discount Goods 15 14.50 14 13 12.69 12 10.93 11 10.71 10 5.37 4.96 4.84 4.42 4 3 2 Times interest earned ratio
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