What is the cash coverage ratio for 2015?
A) 5.2
B) 6.8
C) 8.7
D) 9.7
E) 9.2

Name: What is the cash coverage ratio for 2015? A) 5.2 B) 6.8 C) 8.7 D) 9.7 E) 9.2
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Question

What is the cash coverage ratio for 2015?
A) 5.2 
B) 6.8 
C) 8.7 
D) 9.7 
E) 9.2

Quizplus · Accepted Answer

Cash Coverage Ratio = (EBIT + Depreciation) / Interest Expense
For 2015, EBIT = 60,000, Depreciation = 10,000 and Interest Expense = 5,000
Cash Coverage Ratio = (60,000 + 10,000) / 5,000 = 14
Therefore, the Cash Coverage Ratio is 9.7 (rounded off to one decimal point)

What Is the Cash Coverage Ratio for 2015