QUESTION 10 An equity multiplier of 1.005 and a TIE of 30.02 would probably indicate that...

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Answer 1

Answer #1

Equity multiplier is the ratio to depict total assets financed by shareholders equity. An equity multiplier close to 1 shows that almost all the assets are owned by shareholders itself.

TIE ratio = EBIT /Total Interest expense

As TIE ratio is very high, Interest expense is very small compared to EBIT.

Therefore, the company has large excess borrowing capacity.

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Answer 2

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QUESTION 10 An equity multiplier of 1.005 and a TIE of 30.02 would probably indicate that...

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