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Unformatted text preview: How does Computron compare with the industry with respect to financial leverage? What can you conclude from these ratios? Answer: Debt Ratio 08 = Total Liabilities/Total Assets = ($1,039,800 + $500,000)/$3,516,952 = 43.8%. Tie 08 = EBIT/Interest = $502,640/$80,000 = 6.3 . EBITDA Coverage 08 = + Payments Lease EBITDA / + + Payments Lease Repayments Loan Interest = ($502,640 + $120,000 + $40,000)/($80,000 + $40,000) = 5.5 . The firms debt ratio is much improved from 2007, and is still lower than its 2006 level and the industry average. The firms TIE and EBITDA coverage ratios are much improved from their 2006 and 2007 levels. The firms TIE is better than the industry average, but the EBITDA coverage is lower, reflecting the firms higher lease obligations....
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- Spring '08