Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In 2016, Natural Selection, a nationwide computer dating service, had $536 million of assets and $218 million of liabilities. Earnings before interest and taxes were

In 2016, Natural Selection, a nationwide computer dating service, had $536 million of assets and $218 million of liabilities. Earnings before interest and taxes were $138 million, interest expense was $29 million, the tax rate was 40 percent, principal repayment requirements were $25.8 million, and annual dividends were 30 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?%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Managerial Finance

Authors: Chad Zutter, Scott Smart

16th Global Edition

1292400641, 978-1292400648

More Books

Students also viewed these Finance questions

Question

State the criteria for recognition of a liability?

Answered: 1 week ago

Question

is particularly relevant to these issues.)

Answered: 1 week ago