Points
%
Score
:
20
/
20 100
7
.
Award
:
2 out of 2
.
00 points
Hint #1
If depreciation is $100,000, what is its cash coverage ratio?
rev: 09_12_2017_QC_CS-99598, 09_14_2017_QC_CS-99598
Lever Age pays an 10% rate of interest on $9.00 million of outstanding debt with face value $9
million. The firm’s EBIT was $3 million.
a. What is its times interest earned? (Round your answer to 2 decimal places.)
Lever Age pays an 10% rate of interest on $9.00 million of outstanding debt with face value $9
million. The firm’s EBIT was $3 million.
a. What is its times interest earned? (Round your answer to 2 decimal places.)
Hints
b.
decimal places.)
(Round your answer to 2
Cash coverage ratio
Times interest earned 3.33
3.44
+/-1%
+/-1%
Cash coverage ratio
Cash coverage ratio =
Times interest earned 3.33
3.44
$3.0 million + 100,000
$900,000 = 3.44
Interest expense = 0.10 × $9.00 million = $900,000
Times interest earned = $3,000,000 / $900,000 = 3.33
rev: 09_12_2017_QC_CS-99598, 09_14_2017_QC_CS-99598
E
xplanation
:
If depreciation is $100,000, what is its cash coverage ratio?
a.
b.
b.
decimal places.)
(Round your answer to 2
