Question
Westmoreland Company Following are selected data from Westmoreland Companys financial statements. 2017 2016 Current liabilities $230,000 $160,000 Long-term debt 120,000 320,000 Stockholders equity 420,000 540,000
Westmoreland Company Following are selected data from Westmoreland Companys financial statements.
2017 2016
Current liabilities $230,000 $160,000
Long-term debt 120,000 320,000
Stockholders equity 420,000 540,000
Cash payments for additions to plant and equipment 45,000 32,000
Net cash flow from operating activities 80,000 51,000
Interest and principal payments 12,000 8,000
Net operating cash flows before interest and taxes 68,000 43,000
Net income 90,000 72,000
Interest expense 8,500 11,500
Income taxes 16,000 14,500
Dividends paid 15,000 30,000
Refer to the Westmoreland Company data. The companys debt service coverage ratio for 2017 indicates that the
a. companys ability to pay principal and interest to creditors has declined.
b. company has more net income available to allocate to stockholders after the payment of debt.
c. company had significantly changes in current assets and current liabilities during the period.
d. company generates about $2 of cash from operations to cover every $1 of debt.
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