Question
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
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
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