Determine the Minden Co dividend cover ratio

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Question - Minden Co. has current assets of $180,000 (cash, $20,000; accounts receivable, $70,000; inventory, $90,000), and long-term assets that had cost $400,000, with amortization to date of $180,000.  Sales were $500,000, and the operating profit was $50,000.  The tax was $20,000 and the interest paid was $10,000. A dividend of $10,000 was paid to the common shareholders.  There are 1,000 shares in the issue. Determine the Minden Co. dividend cover ratio?

a. 2.5 times

b. 3.5 times

c. 2 times

d. 3 times

e. 5 times

Reference no: EM133115779

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