Company A has three debt issues of $3,000 each. The interest rate on issue A is 4

Question:

Company A has three debt issues of $3,000 each. The interest rate on issue A is 4 percent, on B the rate is 6 percent, and on C the rate is 8 percent. Issue B is subordinate to A, and issue C is subordinate to both A and B. The firm’s operating income (EBIT) is $500. Compute the times-interest-earned ratio for issue C. What does the answer imply? Does the answer mean that the interest will not be paid?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: