Refer to the financial statements and related disclosure notes of PetSmart in Appendix B located at the

Question:

Refer to the financial statements and related disclosure notes of PetSmart in Appendix B located at the back of this textbook. Long-term solvency refers to a company's ability to pay its long-term obligations. Financing ratios provide investors and creditors with an indication of this element of risk.

Required:

1. Calculate the debt to equity ratio for PetSmart at February 2, 2014. The average ratio for companies in the pet supplies industry in a comparable time period was 1.8. What information does your calculation provide an investor?

2. Calculate PetSmart's times interest earned ratio for the year ended February 2, 2014. The coverage for com-panies in the pet supplies industry in a comparable time period was 12. What does your calculation indicate about PetSmart's risk?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Solvency
Solvency means the ability of a business to fulfill its non-current financial liabilities. Often you have heard that the company X went insolvent, this means that the company X is no longer able to settle its noncurrent financial...