QUESTION 7 Driver Enterprises just reported earnings before interest and taxes (EBIT) of $51,861 and interest expense of $3,874. Included in its operating expenses were lease expenses of $14,592. On its balance sheet it also reported $25,809 as the present value of the lease obligations based on the lease payment data provided in its footnotes. Calculate the fixed charge coverage ratio after incorporating the valuation of the lease obligations. Assume the appropriate discount rate for valuing the leases is 4%. Present your answer rounded to two decimal places, e.g., 20.00.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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QUESTION 7
Driver Enterprises just reported earnings before interest and taxes (EBIT) of $51,861 and interest expense of $3,874. Included in its
operating expenses were lease expenses of $14,592. On its balance sheet it also reported $25,809 as the present value of the lease
obligations based on the lease payment data provided in its footnotes. Calculate the fixed charge coverage ratio after incorporating the
valuation of the lease obligations. Assume the appropriate discount rate for valuing the leases is 4%. Present your answer rounded to
two decimal places, e.g., 20.00.
Transcribed Image Text:QUESTION 7 Driver Enterprises just reported earnings before interest and taxes (EBIT) of $51,861 and interest expense of $3,874. Included in its operating expenses were lease expenses of $14,592. On its balance sheet it also reported $25,809 as the present value of the lease obligations based on the lease payment data provided in its footnotes. Calculate the fixed charge coverage ratio after incorporating the valuation of the lease obligations. Assume the appropriate discount rate for valuing the leases is 4%. Present your answer rounded to two decimal places, e.g., 20.00.
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