Mountain Oil, Inc., is a large importer of flavor infused olive oils. The market for the company's oils has grown rapidly and the company is considering issuing additional long-term debt to finance an expansion. Currently, the company has $40 million in 10 percent debt outstanding. Its after-tax net income is $12 million, and the company is in the 40 percent tax bracket. The company is required by the debt holders to maintain its times interest earned ratio at 3.5 or greater. Use the above information to answer the following questions. What is the present coverage (times interest earned) ratio?: 1 jon How much additional 10 percent debt can the company issue now and maintain its times interest earned ratio at 3.5? Assume for this calculation that earnings before interest and taxes remain at their present level.); retail products, has annual credit des of $2.400,000 and gross profit margin of 31 percent on period of 35 level of 530,137 If the management of VVV wishes to maintain an averad accounts receivable should it carry? (Assume a 365-day 30 3.5 Assume that all of VVV's sales are on credit. If the inven 4.0 what average level of inventory should the VW maintai 4.5 as the industry? $207,000 5.0 over for this industry averages 3 times, ve the same inventory turnover figure 5.5 Question 30 Not yet answered Points out of 4.00 7.5 Flag question Mountain Oil, Inc. is a large importer of flavor infused olive 6.0 market for the company's oils has grown rapidly and the company is considering issuing additional td 6.5 Hebt to finance an expansion Currently the company has $40 million in 10 percent debt outstanding -tax net income is $12 million, and the 7,0 company is in the 40 percent tax bracket. The company is re the debt holders to maintain its times interest earned ratio at 3.5 or greater Use the above information to answer the following questior 8.0 What is the present coverage (times interest earned) ratio: How much additional 10 percent debt can the company issue now and maintain its times interest earned ratio at 3.5? Assume for this calculation that earnings before interest and taxes remain at their present level.); If the management of VVV wishes to maintain an average collection period of 35 d accounts receivable should it carry? (Assume a 365-day year.) $230,137 Assume that all of VVV's sales are on credit. If the inventor over for this indu what average level of inventory should the VVV maintain to achieve the same inve as the industry? $207,000 Question 30 $2.85 million Not yet answered $4.46 million Points out of 4.00 $6.86 million a large importer of flavor infused olive oils. The market for the co bany is considering issuing additional long-term debt to finance a 6 million in 10 percent debt outstanding. Its after-tax net income percent tax bracket. The company is required by the debt holde at 3.5 or greater nation to answer the following questions. coverage (times interest earned) ratio?: Flag question $14.86 million $24.86 million $26.86 million $28.57 million 11 10 percent debt can the company issue now and maintain its his calculation that earnings before interest and taxes remain a . Previous page
