Financial Reporting and Analysis Q196

0. The reported earnings before interest and tax for Bling Corporation were USD127,500. The corporate tax rate is 35%. Other bits of information are as follows:
Interest charges $44,000
Lease payments $20,000

What is the fixed charge coverage ratio for the company?

Answer
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Option : C
Explanation : Fixed charge coverage = (EBIT + Lease payments) / (Interest payments + Lease payments)
= (127,500 + 20,000) / (44,000 + 20,000) = 2.30

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