Question

In: Finance

A firm has EBIT of $300,000 and depreciation expense of $12,000. Fixed charges total $44,000.

A firm has EBIT of $300,000 and depreciation expense of $12,000. Fixed charges total $44,000. Interest expense totals $7,000. What is the firm's cash coverage ratio?

Multiple Choice

3.76 times

4.91 times

7.25 times

7.09 times

Expert Solution

We have the cash coverage ratio is

= (EBIT + Non cash expenses ) / Fixed expenses

GIVEN that

EBIT = $ 300,000

Non Cash Expenses = Depreciation

= $12,000

Fixed Expenses = $ 44,000

Applying the above values in the formula we have

= ( $ 300,000 + $ 12,000 ) / $ 44,000

= $ 312,000 / $ 44,000

= 7.0909

= 7.09 times ( when rounded off to two decimal places )

Thus the firm’s cash coverage ratio = 7.09 times.

Junaid answered 1 year ago

A firm has net sales of $5,500,000, Cost of Goods Sold $3,500,000, Depreciation Expense of $300,000,...

A firm has net sales of $5,500,000, Cost of Goods Sold $3,500,000, Depreciation Expense of $300,000, Selling and Administrative Expenses of $500,000, Interest Expense of $200,000, and an average tax rate of 20%. 25. The firm's Net Income is: a. 210,000 b. 400,000 c.  700,000 d  800,000 26. The firm's Operating Margin is: a. 14.0% b. 21.8% c. 33.3%  d.  67.1% 27. firm's Gross Profit Margin is: a. 21.5% b. 30.0% c.  36.4% d  50.0% 28. firm's Pre-taxable Income is:...

firm charges a fixed price of £80 for each shirt sold. The firm has a total...

firm charges a fixed price of £80 for each shirt sold. The firm has a total cost function: TC = Q3 – 136Q. (a) Write down the equation of the total revenue function. (b) Determine the break-even point.

A firm has S600,000 earnings before depreciation, interest, taxes. The firm has a depreciation expense of...

A firm has S600,000 earnings before depreciation, interest, taxes. The firm has a depreciation expense of $100,000, and a tax rate of 35%? What is net cash flow from operations?

ABC Corp, has a EBIT of $462,466. Their depreciation expense is $80,500, their net working capital...

ABC Corp, has a EBIT of $462,466. Their depreciation expense is $80,500, their net working capital increased by $17,970, and they spent $129,681 on capital assets. What is their unlevered cash flow if their tax rate is 0.35?

ABC Corp, has a EBIT of $599,843. Their depreciation expense is $80,097, their net working capital...

ABC Corp, has a EBIT of $599,843. Their depreciation expense is $80,097, their net working capital increased by $17,154, and they spent $172,704 on capital assets. What is their unlevered cash flow if their tax rate is 0.32?

The Boss Corporation has operating income (EBIT) of $750,000. The company's depreciation expense is $200,000. Boss...

The Boss Corporation has operating income (EBIT) of $750,000. The company's depreciation expense is $200,000. Boss Corp. is 100% equity financed, and it faces a 40% tax rate. They invested $100,000 in Net Fixed Assets, and $25,000 in additional working capital. what are the company's net income, its net cash flow, operating cash flow and cash flow from assets? net income = $450,000; operating cash flow = $650,000; cash flow from assets = $525,000 1. How much was cash flow...

Question: Based on the following transactions, complete this income statement: Sales: Operating Expense: Depreciation Expense: EBIT:...

Question: Based on the following transactions, complete this income statement: Sales: Operating Expense: Depreciation Expense: EBIT: Intresrest Expense: Pre-tax Income: Taxes: Net Income: Dividened: Paid to Retained Earning: 1. Earn $85,000 in sales revenue: $40,000 into Accounts Receivable and $45,000 in cash. 2. The sales require $50,000 worth of existing inventory. $20,000 of additional inventory is purchased on credit and applied to the Accounts Payable. 3. $30,000 is collected from Accounts Recievable. 4. $35,000 of the Accounts Payable is due...

ABC Corp. The company has fixed costs of $300,000. Total costs, both fixed and variable, are...

ABC Corp. The company has fixed costs of $300,000. Total costs, both fixed and variable, are $378,000 when 40,000 units are produced. How much is the variable cost per unit? (Please round to the nearest cent.) The following information pertains to the ABC Corporation: Total Units for information given 7000 Fixed Cost per Unit $200 Selling Price per Unit $325 Variable Costs per Unit $225 Target Operating Income $100,000 How many units need to be sold in order to reach...

Megan Ryan & Associates has operating income (EBIT) of $190,000, fixed costs of $80,000, interest expense...

Megan Ryan & Associates has operating income (EBIT) of $190,000, fixed costs of $80,000, interest expense of $52,000, and its tax rate is 40 percent. If the company were able to increase its operating income by 14 percent, by what percentage would the earnings per share increase?

A project has fixed costs of $1,500 per year, depreciation charges of $500 a year, annual...

A project has fixed costs of $1,500 per year, depreciation charges of $500 a year, annual revenue of $9,000, and variable costs equal to two-thirds of revenues. a. If sales increase by 13%, what will be the percentage increase in pretax profits? (Round to 2 decimal places) b. What is the degree of operating leverage of this project? (round to 2 decimal places)