FVA Inc.’s net income for the most recent year was $16,985. The tax rate was 35
ID: 2799749 • Letter: F
Question
FVA Inc.’s net income for the most recent year was $16,985. The tax rate was 35 percent. The firm paid $3,986 in total interest expense and deducted $2,665 in depreciation expense. What was the cash coverage ratio for the year? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16).) Firm A and Firm B have debt / total asset ratios of 37 percent and 27 percent and return on total assets of 7 percent and 10 percent, respectively. What is the return on equity for Firm A and Firm B? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places (e.g., 32.16).)
Explanation / Answer
net income - 16985
depreciation - 2665
Interest - 3986
Cash coverage ratio - interest /EBIT
EBT - 16985*100/65 = 26130
EBIT =. 26130+3986 = 30116
= 30116/3986
= 7.55 times
debt/Toatal asset = Average total Asset/total stock equity
Return on Total asset = Net Profit/total ASSET
return Equity = Net Profit/Average stock equity
D/E
37
27
ROTA
7
10
ROE
259
270
PERCENTGE
2.59
2.70
D/E
37
27
ROTA
7
10
ROE
259
270
PERCENTGE
2.59
2.70
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.