1. Discuss the different definitions of debt in ratio analysis.
2. Why do people view having too much debt as risky? If you were interested in determining whether a company had too much debt, what measure would you use? Why? How much debt do you think would generally be considered too much?
3. It can be argued that the TIE ratio doesn't make much sense. Why? How would you change the measure to be more meaningful? (Hint: Think in terms of cash flows.)
4. Can managers affect market value ratios?
5. Can a competent financial analyst always correctly assess a firm's financial health from publicly available information? Explain.