JK Motors has sales of $96,400, costs of $53,800, interest paid of $2,800, and depreciation of $7,100. The tax rate is 21 percent. What is the value of the cash coverage ratio?
A) 15.21
B) 12.14
C) 17.27
D) 23.41
E) 12.68

Question

Quizplus · Accepted Answer

Cash coverage ratio = EBIT / Interest paid= (Sales - Costs - Depreciation) / Interest paid= (96,400 - 53,800 - 7,100) / 2,800= 35,500 / 2,800= 12.68

JK Motors Has Sales of $96,400, Costs of $53,800, Interest