Terry's Pets Paid $2,380 in Interest and $2,200 in Dividends

question 41

Multiple Choice

Terry's Pets paid $2,380 in interest and $2,200 in dividends last year. The times interest earned ratio is 2.6 and the depreciation expense is $680. What is the value of the cash coverage ratio?

• A) 1.42
• B) 2.72
• C) 2.94
• D) 2.89
• E) 2.46

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Definitions:

Advertising Expense

Costs incurred by a business to promote its products or services, including media buys, production costs, and marketing materials.

Anticipated Tax Credits

Tax credits that are expected to be received in the future, which can reduce the amount of taxes owed.

Income Tax Expense

The total amount of income tax that a company reports as an expense in its financial statements for a specific period.

Pretax Income

The total earnings of a company before taxes have been deducted, also known as earnings before tax (EBT).