Question

Sales = $250,000, cost of goods sold = $180,000, depreciation = $22,000, net income = $18,500,...

Sales = $250,000, cost of goods sold = $180,000, depreciation = $22,000, net income = $18,500, tax rate = 34%. 1) What is the times interest earned ratio? 2) What is the cash coverage ratio?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1



EBIT = Revenues - COGS - Depreciation = 250,000 - 180,000 -22,000 = 48,000

Net Income = (Sales - COGS -Depreciation - Interest ) * ( 1- tax rate)
18500 = ( 250,000 - 180,000 - 22,000 - Interest ) * ( 1- 34%)
Interest = 250,000 - 202,000 - 18500/0.66 = 19969.6969

1)Times interest earned ratio = EBIT/Interest =( EBIT)/ Interest = 48,000/19969.6969 = 2.403

2) Cash coverage ratio = (EBIT + Depreciation)/Interest = (48,000 + 22,000)/19969.6969 = 3.5053

Best of Luck. God Bless
Please Rate well

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
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.) A. What is Belyk Paving Company’s net income? B. What is Belyk Paving Company’s operating cash flow? C. Determine Belyk Paving Company’s Cash...
Consider a company with a cash coverage ratio of 4.2 and the following information: Sales of...
Consider a company with a cash coverage ratio of 4.2 and the following information: Sales of $25.6 million, Cost of goods sold of $14 million, Depreciation of 7.7 million. What is the company’s interest expense? What is its times interest earned ratio? If the tax rate is 21% what is its net income?
For the most recent year, Seether, Inc., had sales of $447,000, cost of goods sold of...
For the most recent year, Seether, Inc., had sales of $447,000, cost of goods sold of $218,400, depreciation expense of $58,100, and additions to retained earnings of $50,300. The firm currently has 32,000 shares of common stock outstanding, and the previous year’s dividends per share were $1.35.    Assuming a 30 percent income tax rate, what was the times interest earned ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)    Times interest...
XYZ Inc. has the following income statement as of 2014. Sales$7,035,000 Cost of goods sold (5,875,000)...
XYZ Inc. has the following income statement as of 2014. Sales$7,035,000 Cost of goods sold (5,875,000) Other expenses (550,000) EBITDA 609,000 Depreciation (116,000) EBIT 492,000Interest expense (70,000)EBT 422,000Tax (40%) (169,000)Net Income $253,000 11. Calculate the Times-Interest-Earned (TIE) ratio of this company. If the industry average of this is 6.3x, what is your evaluation for this company’s TIE ratio? (Closest number) a. 6.2 times; good b. 6.2 times; bad c. 7.03times; good d. 7.03times; bad
Calculate cost of goods sold given the following: sales = $67, depreciation = 12.8, interest expense...
Calculate cost of goods sold given the following: sales = $67, depreciation = 12.8, interest expense = $17, net income = $4.4 and a tax rate of 21%.
(Evaluating profitability​) Last​ year, Stevens Inc. had sales of $396,000​, with a cost of goods sold...
(Evaluating profitability​) Last​ year, Stevens Inc. had sales of $396,000​, with a cost of goods sold of 115,000. The​ firm's operating expenses were $126,000​, and its increase in retained earnings was $50,000. There are currently 21,000 common stock shares outstanding and the firm pays a$1.56 dividend per share. a. Assuming the​ firm's earnings are taxed at 34 percent, construct the​ firm's income statement. b. Compute the​ firm's operating profit margin. c. What was the times interest​ earned? a. Assuming the​...
Your pro forma income statement shows sales of $975,000​, cost of goods sold as $503,000​, depreciation...
Your pro forma income statement shows sales of $975,000​, cost of goods sold as $503,000​, depreciation expense of $102,000​, and taxes of $148,000 due to a tax rate of 40 % What are your pro forma​ earnings? What is your pro forma free cash​ flow? Complete the pro forma income statement​ below:  ​(Round to the nearest​ dollar.) Sales $ Cost of Goods Sold $ Gross Profit $ Depreciation $ EBIT $ Taxes (40%) $ Earnings $
Net Income and OCT During 2015, rainbow umbrella corp. had sales of$590,000 cost of goods sold,...
Net Income and OCT During 2015, rainbow umbrella corp. had sales of$590,000 cost of goods sold, administrative and selling expenses and depreciation expenses were $455,000, $85,000 and $125,000, respectively. In addition, the company had an interest expense of $65,000 and a tax rate of 35% (ignore any tax loss carry back or carry forward provisions) A. What is the company’s net income for 2015? B. What is it’s operating cash flow? C. Explain your result in (a) and (b)
Your pro forma income statement shows sales of $956,000​, cost of goods sold as $496,000​, depreciation...
Your pro forma income statement shows sales of $956,000​, cost of goods sold as $496,000​, depreciation expense of $102,000​, and taxes of $143,200 due to a tax rate of 40%. What are your pro forma​ earnings? What is your pro forma free cash​ flow? Complete the pro forma income statement​ below:  ​(Round to the nearest​ dollar.) Sales $ Cost of Goods Sold $ Gross Profit $ Depreciation $ EBIT $ Taxes (40%) $ Earnings $ The pro forma free cash...
Major Manuscripts, Inc. 2009 Income Statement Net sales 7,600 Cost of goods sold 6,665 Depreciation 210...
Major Manuscripts, Inc. 2009 Income Statement Net sales 7,600 Cost of goods sold 6,665 Depreciation 210 Earnings before interest and taxes 725 Interest paid 21 Taxable Income 704 Taxes 245 Net income 459      Dividends 206 Major Manuscripts, Inc. 2009 Balance Sheet 2009 2009 Cash 2,150 Accounts payable 1,550 Accounts rec. 860 Long-term debt 280 Inventory 2,300 Common stock 2,500 Total 5,310 Retained earnings 4,000 Net fixed assets 3,020 Total assets 8,330 Total liabilities & equity 8,330 Major Manuscripts, Inc....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT