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Question
Use the following data to answer the question: What are the three interest coverage ratios based on pretax income and interest expense?
| 2015 | 2016 | |
| Current assets | $860 | $896 |
| Current liabilities | 710 | 818 |
| Debt in current liabilities | 1 | 39 |
| Long-term debt | 506 | 408 |
| Total assets | 2,293 | 2,307 |
| Capital expenditures | 111 | 117 |
| Change in deferred taxes | –29 | –20 |
| Sales | 4,100 | 4,200 |
| Operating expenses | 3,307 | 3,260 |
| Rental expense | 0 | 248 |
| General expenses | 562 | 528 |
| Depreciation | 139 | 136 |
| Interest expense | 39 | 30 |
| Income taxes | 5 | 8 |
a) For 2016, interest coverage ratios based on EBIT, EBITDA, and EBITDAR are 5.47, 5.47, and 1.48, respectively.
b) For 2016, interest coverage ratios based on EBIT, EBITDA, and EBITDAR are 2.36, 5.92, and 13.73, respectively.
c) For 2016, interest coverage ratios based on EBIT, EBITDA, and EBITDAR are 0.93, 5.47, and 1.48, respectively.
d) For 2016, interest coverage ratios based on EBIT, EBITDA, and EBITDAR are 0.93, 5.47, and 13.73, respectively.
Answer
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