What is Ram Company's interest coverage ratio on these accounting question? Ram Company's after-tax net income was $120. Their interest paid was$50. Assuming the corporate tax is 40%, what is Ram Company's interestcoverage ratio?A. 1.4B. 2.4C. 5D. 6.7E. None of the above

Step 1: Calculate the pre-tax income.= after-tax net income / (100% - 40%)= $120 / 0.60= $200since…

Answered: Ram Company's after-tax net income was…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 3P

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Ram Company's after-tax net income was $120. Their interest paid was $50. Assuming the corporate tax is 40%, what is Ram Company's interest coverage ratio? A. 1.4 B. 2.4 C. 5 D. 6.7 E. None of the above