TB MC Qu$.21$ You would like to borrow money...

You would like to borrow money three years from now to build a new building. In preparation for applying for that loan, you are in

the process of developing target ratios for your firm. Which set of ratios represents the best target mix considering that you want

to obtain outside financing in the relatively near future?

Multiple Choice

Times interest earned $=1\mathrm{.}5$; debt$-$equity ratio $=1\mathrm{.}2$

Cash coverage ratio $=\mathrm{.}5$; total debt ratio $=\mathrm{.}2$

Cash coverage ratio $=2\mathrm{.}6$; debt$-$equity ratio $=\mathrm{.}3$

Times interest earned $=1\mathrm{.}7$; debt$-$equity ratio $=16$