Question 7:

Evaluate the financial stability and risk of a company based on the following data:

• Long-term Debt: $100,000
• Short-term Debt: $50,000
• Total Liabilities: $200,000
• Shareholders' Equity: $300,000
• EBIT: $70,000
• Interest Expense: $10,000

Requirements:

1. Calculate the Debt to Equity Ratio.
2. Calculate the Interest Coverage Ratio.
3. Assess the company's ability to meet its long-term obligations.
4. Assess the company's financial risk based on these ratios.