In 2016, Natural Selection, a nationwide computer dating service, had $504 million of assets and $202...

In 2016, Natural Selection, a nationwide computer dating service, had $504 million of assets and $202 million of liabilities. Earnings before interest and taxes were $122 million, interest expense was $27.5 million, the tax rate was 40 percent, principal repayment requirements were $24.2 million, and annual dividends were 25 cents per share on 22 million shares outstanding.

1. Calculate the following for Natural Selection: (Round your answers to 2 decimal places.)

A: Liabilities to equity ratio=

B: Times interest earned ratio=

C: Times burden covered

2. What percentage decline in earnings before interest and taxes could Natural Selection have sustained before failing to cover: (Round your answers to 1 decimal place.)

A: Interest payment requirements? %

B: Principal and interest requirements? %

C: Principal, Interest, and common dividend payments? %

Expert Solution

Question 1

jeff jeffy answered 1 month ago

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