Packard Corporation reports the following information:
Net cash provided by operating activities €275,000
Average current liabilities 150,000
Average non-current liabilities 100,000
Dividends declared 60,000
Capital expenditures 110,000
Payments of debt 35,000
Packard's cash debt coverage is
A) 1.10.
B) 1.83.
C) 2.75.
D) 6.11.

Question

Quizplus · Accepted Answer

The cash debt coverage ratio is calculated by dividing net cash provided by operating activities by the total debt (average current liabilities + average non-current liabilities). In this case, it's €275,000 / (€150,000 + €100,000) = 1.10.

Packard Corporation Reports the Following Information