Use the following information to answer this question. Windswept, Inc. 2010 Inco

Question

Use the following information to answer this question. Windswept, Inc. 2010 Income Statement ($ in millions) $9,400 7,650 380 $1,370 Net sales Less: Cost of goods sold Less: Depreciation Earnings before interest and taxes Less: Interest paid Taxable Income Less: laxes Net income $1,282 449 $833 Windswept, Inc. 2009 and 2010 Balance Sheets ($ in millions) 2009 2010 2009 2010 $210$240Accounts payable $1,510 $1,602 1,323 3,2402,970 780 Cash 1,010 990 1,660 890 Long-term debt 1,665 Common stock ccounts rec. Inventory Total Net fixed assets Total assets $2,860 $2,795 Retained earnings 530 3,430 3,880 $6,290$6,675 Total liab. & equity $ 6,2906,675 What is the cash coverage ratio for 2010? 3.84 O 15.57 O 729 19.89 2.73

Explanation / Answer

Cash coverage ratio : this ratio measure the ability of the firm to pay its debt interest . Cash coverage ratio = (EBIT+non cash expenses)/interest EBIT = 1370 Depreciation = 380 EBIT+depreciation 1750 Interest paid 88 Cash coverage ratio = 1750/88       19.89 Hence, correct answer is option 19.89

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