Question
Problem 4-18 Leverage Ratios (LO3) Lever Age pays an 8% rate of interest on $10 million of outstanding debt with face value $10 million. The
Problem 4-18 Leverage Ratios (LO3)
| Lever Age pays an 8% rate of interest on $10 million of outstanding debt with face value $10 million. The firms EBIT was $1 million. |
| a. | What is times interest earned? (Round your answer to 2 decimal places.) |
| Times interest earned |
|
| b. | If depreciation is $200,000, what is cash coverage? (Round your answer to 2 decimal place.) |
| Cash coverage |
|
| c. | If the firm must retire $300,000 of debt for the sinking fund each year, what is its fixed-payment cash-coverage ratio (the ratio of cash flow to interest plus other fixed debt payments)? (Round your answer to 2 decimal places.) |
| Fixed-payment cash-coverage ratio |
|
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Advances In Financial Machine Learning
Authors: Marcos Lopez De Prado
1st Edition
1119482089, 978-1119482086
