a private company has two debt covenants in place;

A

$.$

$$maximum debt to equity ratio. CUrrent long 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$),$ is any, would be affected, and whether the policy would increase or decrease the ratio