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In 2016, Natural Selection, a nationwide computer dating service, had $516 million of assets and $208 million of liabilities. Earnings before interest and taxes were
In 2016, Natural Selection, a nationwide computer dating service, had $516 million of assets and $208 million of liabilities. Earnings before interest and taxes were $128 million, interest expense was $28.6 million, the tax rate was 40 percent, principal repayment requirements were $24.8 million, and annual dividends were 20 cents per share on 21.2 million shares outstanding. a. Calculate the following for Natural Selection: (Round your answers to 2 decimal places.) Liabilities-to-equity ratio Times-interest-earned ratio Times burden covered 0.68 4.48 1.83 b. What percentage decline in earnings before interest and taxes could Natural Selection have sustained before failing to cover: (Round your answers to 1 decimal place.) % Interest payment requirements? Principal and interest requirements? Principal, interest, and common dividend payments? % %
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