What is the maximum debt ratio for a firm
January 13th, 2018
What is the maximum debt ratio for a firm that is proposing a business plan requiring $500,000 of assets. The firm is projecting $150,000 of sales and $120,000 of operating capital ( including depreciation) for the first year. It can borrow the required $500,000 at a rate of 5% but the bank requires it to have a time interest earned ratio of at least 3.0, what is the max debt ratio?