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A private company has two debt covenants in place: a . Maximum debt - to - equity ratio. Current and long - term liabilities, excluding

A private company has two debt covenants in place:
a. Maximum debt-to-equity ratio. Current and long-term liabilities, excluding future income taxes, are divided by total shareholders'
equity.
b. Minimum times-interest-earned ratio. Income before interest and taxes is divided by total interest expense.
Required:
For each of the accounting policy choices listed below, indicate which ratio(s), if any, would be affected, and whether the policy would
increase or decrease the ratio.
The only two options are decreases or increases for all boxes.
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