During the year, Belyk Paving Co. had sales of $2,275,000. Cost of goods sold, administrative and...

During the year, Belyk Paving Co. had sales of $2,275,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,285,000, $535,000, and $420,000, respectively. In addition, the company had an interest expense of $245,000 and a tax rate of 21 percent. (Ignore any tax loss carryforward provision and assume interest expense is fully deductible.)

What is Belyk Paving Company’s net income?
What is Belyk Paving Company’s operating cash flow?
Determine Belyk Paving Company’s Cash Coverage Ratio, Times Interest Earned (Interest Coverage Ratio) and the Gross Profit Margin?

Provide answer in Excel with formula please

Expert Solution

Particulars	Amount	Formula	Calculation
Sales	$ 2,275,000.00	Given
COGS	$ 1,285,000.00	Given
Gross Profit	$ 990,000.00	Sales - COGS	2275000 - 1285000
Admin & Selling exp	$ 535,000.00	Given
EBDIT	$ 455,000.00	GP - Admin & Selling Exp	990000 - 535000
Depreciation	$ 420,000.00	Given
EBIT	$ 35,000.00	EBDIT - Dep	455000 - 420000
Interest	$ 245,000.00	Given
EBT	$ (210,000.00)	EBIT - Int	35000 - 245000
Tax	$ -	Since loss no tax is payable
Net Income	$ (210,000.00)
Operating cash flow	$ 210,000.00	Net Income + Depreciation	420000 + -210000

Interest Coverage ratio = EBIT/Interest Expense

= 35000/245000

= 0.14 Times

GP Margin = Gross profit / Sales

=990000/2275000

= 0.43 or 43%

Please let me know if you have any queries

jeff jeffy answered 2 years ago

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