Use the table for the question(s)below.
Consider the following income statement and other information:

-Luther's EBIT coverage ratio for the year ending December 31, 2012 is closest to:
A)1.64
B)1.78
C)1.98
D)2.19

Question

Use the table for the question(s)below.
Consider the following income statement and other information:
 
-Luther's EBIT coverage ratio for the year ending December 31, 2012 is closest to:
A)1.64 
B)1.78 
C)1.98 
D)2.19

Quizplus · Accepted Answer

EBIT coverage ratio = EBIT/interest expense
EBIT = 31,000
Interest expense = 15,000 + 6,200 = 21,200
EBIT coverage ratio = 31,000/21,200 = 1.46 (rounded to two decimal places)
Therefore, the closest answer choice is C) 1.98.

Use the Table for the Question(s)below