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Problem 15, part f. in Chapter 3 asks you to construct a five-year financial projection for Aquatic Supplies beginning in 2018. The five-year projection appears
Problem 15, part f. in Chapter 3 asks you to construct a five-year financial projection for Aquatic Supplies beginning in 2018. The five-year projection appears below. | ||||||
Calculate the companys times-interest-earned ratio for each year from 2017 to 2022. | ||||||
Calculate the percentage EBIT can fall before interest coverage dips below 1.0 for each year from 2017 to 2022. | ||||||
Consulting Table 6.5 in the text, what bond rating would Aquatic Supplies have in 2017 if the rating was based solely on the firms interest coverage ratio? | ||||||
Based on this rating, would a significant increase in financial leverage be a prudent strategy for Aquatic Supplies? |
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