Analysis of Financial Statements - Debt Management Ratios
3 important questions on Analysis of Financial Statements - Debt Management Ratios
What are debt management ratios?
Ratios, which give an idea of how the firm has financed its assets as well as the firm;s ability to repay its long-term debt.
Debt management ratios indicate how risky the firm is and how much of its operating income must be paid to bondholders rather than stockholders.
Debt management ratios indicate how risky the firm is and how much of its operating income must be paid to bondholders rather than stockholders.
What the TIE ratio measure?
The firm's ability to meet its annual interest payments.
Why are taxes deducted?
Because interest is paid with pretax money, the firm's ability to pay current interest is not affected by taxes.
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