A Firm Has EBIT of $300,000 and Depreciation Expense of $12,000

question 16

Multiple Choice

A firm has EBIT of $300,000 and depreciation expense of $12,000. Fixed charges total $44,000. Interest expense totals $7,000. What is the firm's cash coverage ratio?

• A) 3.76 times
• B) 4.91 times
• C) 7.25 times
• D) 7.09 times

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Definitions:

Rate Difference

The disparity in interest rates, often used in the context of comparing rates between two different financial products or within different markets.

Spread

The difference between the bid and the ask price of a security or the difference between the interest rate paid for deposits and received for loans.

Institutional Investors

Organizations such as banks, insurance companies, and pension funds that make substantial investments on the capital markets.

Major Exchanges

The leading stock exchanges worldwide, such as the New York Stock Exchange and the Nasdaq, where securities are bought and sold.