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:

Original Investigation

A detailed study or research conducted for the first time to gain new knowledge or insights.

New Knowledge

Information or insights gained that were previously unknown, contributing to the understanding or development of a subject area or field.

Research

A systematic investigation aimed at acquiring new knowledge, which in a business context can lead to new findings that may be applied to improving processes, products, or services.

Identifiability Criteria

The requirements that must be met for an asset or liability to be recognized separately in the financial statements, often relating to control, future economic benefits, or valuation.