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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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