Question
In 2016, Natural Selection, a nationwide computer dating service, had $520 million of assets and $210 million of liabilities. Earnings before interest and taxes were
In 2016, Natural Selection, a nationwide computer dating service, had $520 million of assets and $210 million of liabilities. Earnings before interest and taxes were $130 million, interest expense was $29 million, the tax rate was 40 percent, principal repayment requirements were $25 million, and annual dividends were 25 cents per share on 20 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?
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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