Consolidated Industries Has Total Interest Charges of $20,000 Per Year

question 39

Multiple Choice

Consolidated Industries has total interest charges of $20,000 per year.Sales of $2 million generated an operating income of $220,000 and an after-tax profit of 6% of sales.The firm has a marginal tax rate of 40%.What is the firm's interest coverage ratio?

• A)10
• B)11
• C)12
• D)13

---

Definitions:

Engrams

Hypothetical physical or biochemical changes in the brain that represent memories.

Memory Span

The number of items, usually words or numbers, that a person can retain and recall in correct order.

Memory Span

The capacity to hold a small amount of information in mind in an active, readily available state for a short period.

Short-Term Memory

An ability to hold a small volume of information in a state that is both active and easily accessible for a limited time.