Rising Stars Academy provided the following information on its 2009 Balance Sheet and

Statement of Cash Flows:

Required:
1. Calculate the following ratios for both companies:
a. Debt to equity
b. Debt to total assets
c. Long-term debt to equity
d. Times interest earned (accrual basis)
e. Times interest earned (cash basis)
2. Interpret theseresults.

Transcribed Image Text:

Long-term debt 4,400 Interest expense Total liabilities Total assets Total equity S 398 559 432 1,015 266 150 8,972 38,775 29,803 Net income Interest payments Cash flows from operations Income tax expense Income taxes paid