contestada

Rosita's Resources paid $11,310 in interest and $16,500 in dividends last year. The times interest earned ratio is 2.9, the depreciation expense is $7,900, and the tax rate is 35 percent. What is the value of the cash coverage ratio? ○ 3.10 O 3.71 ○ 2.58 ○ 2.78 03.60

Respuesta :

Answer:

3.60

Explanation:

Given that,

Interest paid = $11,310

Dividend paid last year = $16,500

Times interest earned ratio = 2.9

Depreciation expense = $7,900

Tax rate = 35 percent

Times interest earned ratio = EBIT ÷ Interest expense

2.9 = EBIT ÷ $11,310

2.9 × $11,310 = EBIT

$32,799 = EBIT

Cash coverage ratio:

= (EBIT + Depreciation) ÷ Interest expense

= ($32,799 + $7,900) ÷ $11,310

= $40,699 ÷ $11,310

= 3.60

Otras preguntas