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Bond [772]
3 years ago
10

Ugh inc.'s net income for the most recent year was $16,185. the tax rate was 40 percent. the firm paid $3,906 in total interest

expense and deducted $2,585 in depreciation expense. what was the cash coverage ratio for the year
Business
1 answer:
saul85 [17]3 years ago
4 0
The cash coverage ratio will be calculated as follows:
Earnings before interest and tax (EBIT)+Interest expense
EBIT will be:
16,185/(1-0.4)=16185/0.6=26,975
thus:
EBIT+Tax+Depreciation
=26,975+3906+2585
=33466
next
33466/interest expenses
=33466/3906
=8.5678
Therefore we conclude that cash was 8.5678 times interest expense.

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