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In 2010, Natural Selection, a nationwide computer dating service, had $500 million of assets and $200 million of liabilities. Earnings before interest and taxes were
In 2010, Natural Selection, a nationwide computer dating service, had $500 million of assets and $200 million of liabilities. Earnings before interest and taxes were $120 million, interest expense was $28 million, the tax rate was 40 percent, principal repayment requirements were $24 million, and annual dividends were 30 cents per share on 20 million shares outstanding A) Calculate: Natural Selection's liabilities - to - equity ratio Times interest earned ratio Times burden covered B) What percentage decline in earnings before interest and taxes could Natural Selection have sustained before failing to cover: Interest payment requirements? Principal and interest requirements? Principal, interest, and common dividends payments
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