BEC Ratios (Debt Utilization)

Question 1

Debt to Total Assets: measures the percentage of total assets provided by creditors

Answer 1

total liabilities / total assets

Question 2

Debt to Equity Ratio: shows creditors the company’s ability to sustain losses

Answer 2

total debt / total equity

Question 3

Times Interest Earned Ratio: measures ability to meet interest payments

Answer 3

EBIT / interest expense
or
(N/I before tax + int exp) / int exp