Multiple Choice
Flash In The Pan Cooking School is considering the issuance of additional long-term debt to finance expansion.At the present time the company has $160 million of 10% debentures outstanding.Its after-tax net income is $48 million, and the company's (marginal) income tax rate is 40%.The company is required by the debenture holders to maintain its coverage ratio at 4.0 or greater.Determine Flash's present coverage ratio.
A) 3.33
B) 2.78
C) 5.00
D) 6.00
Correct Answer:
Verified
Correct Answer:
Verified
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