M Chapter 9 Homework M Check Your Work O Rae Srem murd-Black Bee × × C ezto.mhed

Question

M Chapter 9 Homework M Check Your Work O Rae Srem murd-Black Bee × × C ezto.mheducation.com/hm.tpx 2.00 points Two online travel companies, E-Travel and Pricecheck, provide the following selected financial data: (S in thousands) Total assets Total liabilities Total stockholders' equity E-Travel Pricecheck S 6,087,156 $ 1,860,224 477,610 2,732,681 1382,614 3,354,475 Sales revenue Interest expense Tax expense Net income S 3,005,426 S 2,388,212 25,084 48,168 491,472 85,233 156,400 301,526 Required 1-a. Calculate the debt to equity ratio for E-Travel and Pricecheck. (Enter dollar answers in thousands of dollars and round ratios to 2 decimal places.) Debt to Equity Ratio E-Travel Debt to Equity Ratio Pricecheck

Explanation / Answer

Answer =1 (A) CALCULATION OF DEBT TO EQUITY RATIO OF E-TRAVL & PRICE CHECK Debt to Equity Ratio = Total Liabilities / Total Equity E- TRAVEL PRICE CHECK Debt to Equity Ratio = Total Liabilities   $      33,54,475.00 $    4,77,610.00 Divide by "/ " By "/ " By Total Equity = $      27,32,681.00 $ 13,82,614.00 Debt to Equity Ratio = $                       1.23 $                  0.35 Answer = 1(B) Price Check have the heigher ratio beause his equity is more then debt Answer = Pricecheck   Answer = 2 CALCULATION OF TIME INTEREST EARNED RATIO OF E-TRAVL & PRICE CHECK Time interest Earned Ratio = Earning Before interest and taxes / Interest Expenses E- TRAVEL PRICE CHECK Time interest Earned Ratio =   EBIT $      30,05,426.00 $ 23,88,212.00 Divide by "/ " By "/ " By Interest Expesnses = $         3,01,526.00 $    4,91,472.00 Time interest Earned Ratio =   $                       9.97 $                  4.86

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