Ugh inc.'s net income for the most recent year was $16,185. the tax rate was 40 percent. the firm paid $3,906 in total interest expense and deducted $2,585 in depreciation expense. what was the cash coverage ratio for the year
The cash coverage ratio will be calculated as follows: Earnings before interest and tax (EBIT)+Interest expense EBIT will be: 16,185/(1-0.4)=16185/0.6=26,975 thus: EBIT+Tax+Depreciation =26,975+3906+2585 =33466 next 33466/interest expenses =33466/3906 =8.5678 Therefore we conclude that cash was 8.5678 times interest expense.
