Ugh Inc.'s net income for the most recent year was $15,585. The tax rate was 40 percent. The firm paid $3,846 in total interest expense and deducted $2,525 in depreciation expense. What was the cash coverage ratio for the year? (Do not round intermediate calculations and round your final answer to 2 decimal places, e. G., 32.16.) Cash coverage ratio times

4.71

Explanation:

Cash coverage is a financial tool to calculate the proportion of available cash to interest expenses. It is useful in that it gives a deeper insight into available cash to offset interest expense and guide towards proper investment of cash.

Workings

Cash coverage ratio = cash + cash equivalent / interest expenses.

To arrive at the cash equivalent , depreciation is added back to the net income

Cash equivalent = 15,585+ 2,525 = 18,110

Interest expenses = 3,846

Cash coverage ratio = 18,110 / 3,846 = 4.71

This seems high and it is advisable that cash should be used for some short term investments to earn other profit

borrow money from the government then pay the government back 5k

answerproduct line length; product mix width;