he Coffee Hut has EBIT of $1,500,000 and depreciation expense of $400,000. Fixed charges total $500,000. Interest expense totals $70,000. What is the Coffee Hut’s cash coverage ratio? Multiple Choice 3.00 times 2.67 times 3.80 times 2.45 times

he Coffee Hut has EBIT of $1,500,000 and depreciation expense of $400,000. Fixed charges total $500,000. Interest expense totals $70,000. What is the Coffee Hut’s cash coverage ratio? Multiple Choice 3.00 times 2.67 times 3.80 times 2.45 times

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter18: Accounting Periods And Methods

Section: Chapter Questions

Problem 10DQ

See similar textbooks

Related questions

Q: Zero-coupon bond Addson Company will issue a zero-coupon bond this coming month The bond's projected…

A: A bond is a kind of debt securities issued by governments and private companies to raise funds from…

Q: FedEx Corporation stock ended the previous year at $910.00 per share. It paid a $52.00 per share…

A: Given details:Current year stock price: $900Previous year stock price: $910Dividends received:…

Q: Use the following information about Wal-Mart stock. 52 weeks VOL STOCK DIV YLD% P/E (1000s) CLOSE…

A: Stock price keeps changing due to changes in the trading of the stock in the stock market. The…

Q: Total deposits from 2018-2020=$19045008 5 firm concentration ratio= (total volume share of five…

A: The five-firm concentration ratio is a financial metric that measures the market concentration or…

Q: Md -30 -20 A ED -10 3500 3000 2500 2000 1500 1000 500 0 -500 -1000 -1500 Percent Change 10 20 30

A: When new projects are started than huge amount of investment is done in the fixed equipment and land…

Q: One year ago, the Jenkins Family Fun Center deposited $4,400 into an investment account for the…

A: Future value of amount includes the amount being deposited and interest amount account accumulated…

Q: Analy_ze the benefits and challenges associated with the adoption of digital financial products from…

A: Digital financial products refer to financial services, tools, and platforms that are delivered…

Q: The University of Cincinnati Center for Business Analytics is an outreach center that collaborates…

A: Fixed Costs:Rent of Auditorium = $150Speaker cost = $2400Total Fixed cost = $2550Variable cost based…

Q: 11.Please use the information on the statement of financial position as of January 1, 2018 of Rakdee…

A: Capital intensity ratio is ratio between total assets and sales revenue in the business. Spontaneous…

Q: o buys a koi fishpond (and fish to put in it for his wife on their anniversary. He pays $8000 for…

A: In add on loans all interest for three year is added at one time and than monthly payment is done…

Q: A financial planning service offers a college savings program. The plan calls for you to make six…

A: The return on investment represents the profitability of an investment and is expressed in…

Q: A bond issued by IBM on December 1, 1996, is scheduled to mature on December 1, 2096. If today is…

A: The time to maturity of a bond is the length of time until the bond reaches its maturity date, at…

Q: Tanrun Inc. is expected to pay an annual dividend of $0.45 per share in one year. Analysts expect…

A: Since you have posted multiple questions, we will provide the solution only to the first question as…

Q: QUESTION 21 Luther Industries market value of equity is $450 million. In addition, Luther has $150…

A: Yield to maturity refers to the return expected or required from the bond at the time of maturity.…

Q: You have been asked to value a Arithmetic Lookback option which expires in six months time. At the…

A: A lookback option is a type of financial derivative that gives the holder the right, but not the…

Q: Since 70% of the preferred dividends received by a corporation or institutional investor are…

A: Cost of equity is the % cost that the company incurs if it raises new capital through sale of new…

Q: Period Apr 2025 May 2025 i 0.3% 0.4% Cash Flow 5,000 7,000 a) Cash flows occur BOP. Calculate x. b)…

A: An annuity is a financial product or contract that provides a series of regular payments to an…

Q: Below is the overal Performance of Warmart for 2020. make an overall analysis on how it performed…

A: When analyzing a company's performance, one must consider both financial statements and ratios to…

Q: Question 1 You are provided with the returns on Sombingo plc and Tangawizi plc shares which vary…

A: Portfolio refers to the combination of various assets owned by the investors consisting the…

Q: A cutting-edge product of Continental Fan had the following net cash flow series during its first 5-…

A: Internal rate of return(IRR) is one of the techniques of capital budgeting that take into…

Q: Mid States Company is a regional chain department store. It will remain in business for one more…

A: Expected return refers to the minimum return that are to be earned by the bondholders over the…

Q: A stock is expected to pay a dividend of $2.20 at the end of the year (D1 = 2.2). The required rate…

A: The current stock value refers to the current price at which a particular stock is trading in the…

Q: Shiing Shen Chern's credit card company determines his minimum monthly payment by adding all new…

A: Interest rate = 1% Purchase from credit card = $3,600Outstanding balance at month end = $3,600

Q: You are evaluating two different silicon wafer milling machines. The Techron I costs $267,000, has a…

A: EAC represents the annual cost that would result in the same present value as the investment's cash…

Q: Solve for the unknown interest rate in each of the following (Do not round intermediate calculations…

A: The time value of money concept states that the value of money decreases over time or the purchasing…

Q: SOA Candy Company is considering purchasing a machine that will allow them to expand operations. The…

A: Here,Cost of Machine is $22,000,000Annual Sales Increase by per year is $9,000,000Annual Cost…

Q: Calculate (a) the amount financed, (b) the total finance charge, and (c) APR by table lookup (Use…

A: Loan amortization is the process of paying off a loan over a set period of time through regular…

Q: Consider two investment opportunities, Investment A and Investment B. Investment A pays interest at…

A: The effective annual interest rate takes into account the compounding frequency and allows for an…

Q: Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The…

A: Total amount for Investment in $ terms = $12,000Total amount for Investment in Pounds term =$12000 /…

Q: Consider a stock put option with strike price $152 and time to expiration of 6 months. The current…

A: A put option refers to a derivative instrument where the holder of the option has the choice to sell…

Q: Plz show the formula step by step. There is the following table shows the probabilities of…

A: According to bartleby guidelines , if multiple questions are asked , then 1st question needs to be…

Q: Overall portfolio disbursal Annualized Interest rate Monthly interest rate Assume all loans are…

A: Loan amortization is a process in which the value of the loan paid each period is ascertained and…

Q: Consider the following two tractors a company can purchase. The following tables provide the costs…

A: The present value represents the current worth of the future stream of expected cash flows.

Q: The Martian Corporation, a space vehicle development company, is starting a new division that will…

A: The external rate of return of a project refers to the capital budgeting technique that measures the…

Q: Elizabeth Corporation is starting two new projects. Project A requires an investment of $5,000, has…

A: Project A:Initial investment: $5,000Expected return: 16%Standard deviation: 14%Project B:Initial…

Q: The beta of Kimberly-Clark firm is now 0.91 and the Debt-to-Equity ratio is 12%. Assume that…

A: Beta is a financial metric that measures the sensitivity of a stock's returns to the overall…

Q: Intro The local franchise of Jiffy Lube is thinking of buying a new lift for $80,000 that would make…

A: NPV of the project is also known as Net present value. It is a capital budgeting techniques which…

Q: Consider the following data: Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Production 3617 3454…

A: A fixed base index number is a type of index number that compares the current value of a variable…

Q: Which of the following is a commonly found encumbrance? neither of the answers shown air and…

A: A right, lien or any other type of restriction on the unrestricted use of property is referred to as…

Q: 3. Compute straight-line depreciation on the building at the end of one year, assuming an estimated…

A: To calculate the straight-line depreciation on the building, we need to know the initial cost,…

Q: (Calculating free cash flows) Spartan Stores is expanding operations with the introduction of a new…

A: Free cash flow refers to the remaining amount after deducting the payment of operating expenses and…

Q: Heidi wants to make 38 identical pennants for her class to wave at Field Day. If she has enough…

A: There is a need to prepare 38 units of pennants and yards of material available is 19/4 years. It is…

Q: Problem 4.14 (Return on Equity) eBook Problem Walk-Through Pacific Packaging's ROE last year was…

A: Return on equity is one of important profitability ratio and shows how much is profit earned by the…

Q: 4. Richard makes payments of $400 into a savings account each month. The account gains interest at a…

A: When a sum of money deposited into an account is compounded at every point in time, it is said to be…

Q: As part of the work to perform a Monte Carlo simulation, the following information about the unit…

A: At 95% confidence level z =2Range = Expected unit variable operating costs - / + ( Z value ) * (…

Q: Suppose you purchased one of SWH's bonds on the day it was issued. The bond had a coupon rate of…

A: Bonds are debt instruments issued by companies.The issuing company has to pay periodic coupons to…

Q: Calculate the total amount paid over the term of a five-year fixed rate mortgage of $260 000…

A: A mortgage is a sort of loan that people or companies can use to fund the acquisition of real estate…

Q: (a) Biden Ltd has an outstanding issue of convertible bonds with a Rs1, 000 par value. These are…

A: In the given case, we have provided the par value of bond which is to be considered as the maturity…

Q: 23. Assume that a speculator purchases a put option on British pounds (with a strike price of $1.5…

A: A put option offers a right to sell underlying asset at predetermined price in predefined time…

Q: The following facts are available about a convertible bond: Market Price of issuer's common stock =…

A: Market Price of issuer's common stock (S) = $100 Price of an up movement (uS) = $110 Price of a down…

Concept explainers

Cash Flow Statement Analysis

A company's cash flow is the movement of its cash inflows and cash outflows. A cash flow statement is prepared to determine changes in an organization's cash position. A cash flow statement shows how much money was generated and spent on the business during the fiscal year. The cash flow analysis is a method of analyzing an organization's investing, financing, and operating activities. A cash flow statement reveals an organization's liquidity and solvency, as well as its ability to change cash flows in the future. It eliminates the other effects of accounting methods by improving the comparability of different organizations' operational performance.

Question

The Coffee Hut has EBIT of $1,500,000 and depreciation expense of $400,000. Fixed charges total $500,000. Interest expense totals $70,000. What is the Coffee Hut’s cash coverage ratio?

Multiple Choice

3.00 times
2.67 times
3.80 times
2.45 times

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Determine Given Variants

VIEW

Step 2: Computation of Cash coverage ratio

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Sales are 2,000,000. COGS are 1,000,000. Depreciation is 300,000. Taxes are 150,000. SG&A is 100,000. Interest Expense is 75,000. What is Operating Cash Flow? Please explain
Kendall Corners Inc. recently reported net income of $3.4 million and depreciation of $600,000. What was its net cash flow? Assume it had no amortization expense. Enter your answer in dollars. For example, an answer of $1.2 million should be entered as 1,200,000. Round you answer to the nearest dollar.
A firm has EBIT of $300,000 and depreciation expense of $12,000. Fixed charges total $44,000. Interest expense totals $7,000. What is the firm's cash coverage ratio? Multiple Choice 3.76 times 4.91 times 7.25 times 7.09 times
The owner of a bicycle repair shop forecasts revenues of $172,000 a year. Variable costs will be $53,000, and rental costs for the shop are $33,000 a year. Depreciation on the repair tools will be $13,000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. b. Calculate the operating cash flow for the repair shop using the three methods given below: Now calculate the operating cash flow. Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield
You are given the following information. What is the initial cash outflow? Purchase and installation of new equipment $12,000 Sale price of replaced equipment $ 6,000 Book value of replaced equipment $ 3,000 When the new equipment is installed: Inventory increase $ 2,000 Accounts payable increase $ 1,000 Tax rate 40% Group of answer choices $7,400 $11,000 $7,000 $8,600
Calculate the net working capital of the company Using the following information. Cash $2,000 Account receivables $3,500 Intangible assets $9,000 Cash eQuivalent $6,000 Marketable securities $5,000 Notes payable (3%, due in 3 months) $4,000 Prepaid expenses $12,000 Current po1tion of long-te1m loans $7,000 Accrned expenses $6,770 Short term loans $4550 Answer choices: Net working capital $ 9, Net working capital $15, Net working capital $ 11, Net working capital $ 6,
The owner of a bicycle repair shop forecasts revenues of $196,000 a year. Variable costs will be $59.000, and rental costs for the shop are $39.000 a year. Depreciation on the repair tools will be $19.000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20% Calculate the operating cash flow for the repair shop using the three methods given below Now calculate the operating cash flow 1. Dollars in minus dollars out 2. Adjusted accounting profits, in 3.Add back depreciation tax shield
The owner of a bicycle repair shop forecasts revenues of $160,000 a year. Variable costs will be $50,000, and rental costs for the shop are $30,000 a year. Depreciation on the repair tools will be $10,000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. b. Calculate the operating cash flow for the repair shop using the three methods given below: Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield.
I need help on this problem. Pearce Enterprises reported the following information for the past year of operation: Transaction Free Cash Flow $250,000 Operating-cash-flow-to-current-liabilities raition 1.0 times Operating-cash-flow-to-capital-expenditures ratio 3.0 times a) Recorded credit sales of $9,000 b) Collected $4,000owed from customers c) Purchased $28,000 of equipment on long-term credit d) Purchased $16,000 of equipment for cash e) Paid $10,000 of wages with cash f) Recorded utility bill of $1,750 that has not been paid For each transaction, indicate whether the ratio will (I) Increase, (D) decrease, or (N) have no effect.
Directions: Read and analyze the problem below then do the following requirements. Assuming, you owned a sari-sari store and had a beginning cash amounting of P50, 000 and the following transactions occurred during the month. Purchase of goods. Paid in cash. 100, 000 Sales of goods. Received cash. 150,000 Paid utilities 30,000 Paid rent 10,000 Sold equipment for cash 100, 000 Owner withdraws investment 10, 000 Required: Compute for your net cash flow generated/used in operating activities. Compute for your net cash flow generated/used in investing activities. Compute for your net cash flow used in financing activities. Prepare a cash flows statement using direct method.
The owner of a bicycle repair shop forecasts revenues of $160,000 a year. Variable costs will be $50,000, and rental costs for the shop are $30,000 a year. Depreciation on the repair tools will be $10,000. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. Calculate the operating cash flow for the repair shop using the three methods given below: Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield.
Lim Motors has sales of RM116,400, costs of goods sold of RM64,800, depreciation of RM7,100 and interest paid of RM3,800. The tax rate is 21%. What is the value of the cash coverage ratio? Select one: a. 13.58 b. 17.27 c. 12.14 d. 23.41