Use the following information for the remaining problems.

A company has the following income statement:

Sales (100,000 units at $30 each) $3,000,000

Costs 2,500,000

Operating profit 500,000

Interest Expense 100,000

Earnings before taxes 400,000

Taxes (40%) 160,000

Earnings after taxes $ 240,000

Assets Liabilities and Equity

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Cash $ 5000 Accounts payable $ 100,000

Marketable Securities $40,000 |

Accounts Receivable $60,000 | Long term debt $ 400,000

Inventory $95,000

Stockholders Equity $ 500,000

Net Plant and Equipment $800,000

Total Assets $1,000,000 Total Liabilities and Equity $1,000,000

A. What is their coverage ratio?

A. 3X B. 4X C. 5X D. 15X E. 30X

B. What is the companys leverage ratio?

A. 1.05 B. 1.50 C. 1.65 D. 1.95 E. 2.0