Thompson's Jet Skis Has at the End of the Year

question 13

Multiple Choice

Thompson's Jet Skis has at the end of the year Total assets of £650,000, Total Equity of £300,000, EBIT of £200,000 and Interest of £15,000? Calculate the Total debt ratio and Cash coverage ratio?

• A)3.25 and 13.3333.
• B)1.5 and 0.6667.
• C)1.1667 and 0.6667
• D)1.1667 and 13.3333.
• E)3.175 and 13.3333.

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Definitions:

Fully Depreciated

Fully Depreciated refers to an asset that has reached the end of its useful life, and its book value is equal to its salvage value in the financial records.

Double Diminishing-Balance

A method of accelerated depreciation which charges depreciation at a higher rate in the early years of an asset's life.

Accumulated Depreciation

The total amount of an asset's cost that has been allocated as depreciation expense over its useful life.