Calculate cash coverage ratio given the following information: depreciation expense = $6,000; EBIT = $12,000; times interest earned = 4 times.
A) 6.0 times
B) 6.5 times
C) 7.0 times
D) 7.5 times
E) 8.0 times

Question

Quizplus · Accepted Answer

Cash coverage ratio = (EBIT + Depreciation expense) / Interest expense= ($12,000 + $6,000) / ($12,000 / 4)= $18,000 / $3,000= 6 times

Calculate Cash Coverage Ratio Given the Following Information: Depreciation Expense