In 2020, Natural Selection, a nationwide computer dating service, had $518 million of assets and $209 million of liabilities. Earnings before interest and taxes were $129 million, interest expense was $29 million, the tax rate was 40 percent, principal repayment requirements were $24.9 million, and annual dividends were 30 cents per share on 21 million shares outstanding. a. Calculate the following for Natural Selection: Note: Round your answers to 2 decimal places: Liabilities-to-equity ratio Times-interest-earned ratio Times burden covered 0.67 4.45 4.02: b. What percentage decline in earnings before interest and taxes could Natural Selection have sustained before failing to cover: Note: Round your answers to 1 decimal place. Interest payment requirements? Principal and interest requirements? Principal, interest, and common dividend payments? % % %

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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In 2020, Natural Selection, a nationwide computer dating service, had $518 million of assets and $209 million of liabilities. Earnings
before interest and taxes were $129 million, interest expense was $29 million, the tax rate was 40 percent, principal repayment
requirements were $24.9 million, and annual dividends were 30 cents per share on 21 million shares outstanding.
a. Calculate the following for Natural Selection:
Note: Round your answers to 2 decimal places:
Liabilities-to-equity ratio
Times-interest-earned ratio
Times burden covered
0.67
4.45
4.02:
b. What percentage decline in earnings before interest and taxes could Natural Selection have sustained before failing to cover:
Note: Round your answers to 1 decimal place.
Interest payment requirements?
Principal and interest requirements?
Principal, interest, and common dividend payments?
%
%
%
Transcribed Image Text:In 2020, Natural Selection, a nationwide computer dating service, had $518 million of assets and $209 million of liabilities. Earnings before interest and taxes were $129 million, interest expense was $29 million, the tax rate was 40 percent, principal repayment requirements were $24.9 million, and annual dividends were 30 cents per share on 21 million shares outstanding. a. Calculate the following for Natural Selection: Note: Round your answers to 2 decimal places: Liabilities-to-equity ratio Times-interest-earned ratio Times burden covered 0.67 4.45 4.02: b. What percentage decline in earnings before interest and taxes could Natural Selection have sustained before failing to cover: Note: Round your answers to 1 decimal place. Interest payment requirements? Principal and interest requirements? Principal, interest, and common dividend payments? % % %
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