Coverage Ratios: Sectors Ltd Has an EBIT of $7,221,643 and Interest

question 27

Multiple Choice

Coverage ratios: Sectors Ltd has an EBIT of $7,221,643 and interest expense of $611,800. Its depreciation for the year is $1,434,500. What is its cash coverage ratio?

• A) 15.42 times
• B) 18.34 times
• C) 14.15 times
• D) None of the above

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Definitions:

Third Party

An entity or individual that is not directly involved in a legal agreement or transaction but may be affected by it or play a role in its execution.

Sole Proprietor

An individual who owns and operates a business alone, bearing sole responsibility for its debts and obligations.

Express Approval

Explicit consent or agreement to a proposal or condition, often formally stated or documented.

Authority

The legal power or right given to an individual or body to make decisions, direct others, and enforce obedience.