Emma's Electronics Incorporated has total assets of $63 million and total debt of $39 million. The company also has operating profits of $23 million with interest expenses of $6 million
a. What is Ellie's debt ratio?
b. What is Ellie's times interest earned?
c. Based on the information above, would you recommend to Ellie's management that the firm is in a strong enough position to assume more debt and increase interest expense to $7 million.
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