A Company with Operating Income of $200,000,cash Flow from Operating

question 108

Multiple Choice

A company with operating income of $200,000,cash flow from operating activities of $75,000,and gross profit of $380,000 has interest payments of $25,000.What is the company's interest coverage ratio (cash basis) ?

• A) 2.67 or 2.67 to 1
• B) 3 or 3.0 to 1
• C) 4 or 4.0 to 1
• D) 15.2 or 15.2 to 1

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Definitions:

Indirect Claims

Assertions or statements that imply something without saying it directly, often used to suggest an idea subtly.

Disappointment

Disappointment is a feeling of dissatisfaction that arises when expectations or hopes are not met.

Positive Buffer

Positive buffer is a technique used in communication to soften the impact of negative news or feedback with preceding positive statements.

Acknowledges Receipt

The confirmation of having received something, such as a document, message, or goods.