What is interest coverage

Assignment Help Business Management
Reference no: EM132681642

A. An equity investor is considering purchasing a company which has $1,200 of EBITDA for an 8x multiple. The investor is willing to invest $3,000. How much debt is required? Assuming 3 years from now EBITDA is $1,400 and the company is sold for an 8x multiple, what will be the equity return assuming no debt paydown?

B. A company with EBITDA of $1,200 is purchased for an 8x multiple, financed with $6,000 of debt. How much equity is used to finance the purchase? Assuming the company reports interest expense of $240 on its income statement, what is interest coverage?

Reference no: EM132681642

Questions Cloud

What is the entry when the Account receivable is created : What is the entry when the Account receivable is created? What is the journal entry to write off an Account receivable under the allowance method
Calculate the annualized rate of interest on the loan : You plan to borrow ?$10,000 from the bank to pay for inventories for a gift shop you have just opened. The bank offers to lend you the money at 12 percent annua
What is the current value of the company : Calvert Corporation expects an EBIT of $20,000 every year forever. The company currently has no debt, and its cost of equity is 14.5 percent.
Explain the ethical problem in this case : Question - Liona is the managing partner of Ross and Associates, a small audit firm. Explain the ethical problem in this case
What is interest coverage : How much equity is used to finance the purchase? Assuming the company reports interest expense of $240 on its income statement, what is interest coverage?
Calculate the arithmetic mean and the median : The Human Resource department of a large corporate wants to understand the family dental expenses of its employees to determine the feasibility of providing
Prepare in good form a single- step SCI by function : Includes depreciation of $45,000 and employee wages and benefits of $80,000. Prepare in good form a single- step SCI by function within the enterprise
Net present value of the lockbox arrangement : The daily interest rate on Treasury bills is .0125 percent. What is the net present value of the lockbox arrangement?
What is the ending balance in the Allowance : Allowance of Uncollectable Accounts has a debit balance of $5,000 at year end. What is the ending balance in the Allowance of Uncollectable Accounts

Reviews

Write a Review

Business Management Questions & Answers

  How advancements in clinical systems can benefit

Explain how advancements in clinical systems can benefit healthcare organizations today. Your response must be at least 200 words in length.

  Difficult for a company to be profitable

Don't all these extras run up the cost and make it more difficult for a company to be profitable?

  Barcelona-managing quality and performance

On the Job Video: Barcelona: Managing Quality and Performance 1. What is the purpose of control at Barcelona Restaurant Group?

  Mean fraction defective

Determine the value of the p-bar, the mean fraction defective. Then determine the control limits for the p-chart using 99.73% confidence level (3 standard deviations). Is this process in control? If not, which samples were out of control?

  Describe the 7 points of high performance teams in detail

1. Describe the 7 points of high performance teams in detail. 2. Apply Lewin's model to solve the following:

  Light of the current controversy

In your opnion, Discuss the political realities governing international trade in the light of the current controversy over the North American

  Probability of failure of an entire distributed system

How does the probability of failure of an entire distributed system change as the number of independent components in the distributed system grows?

  Discuss potential problems that biometrics

Discuss potential problems that Biometrics can have on society. i.e. the use of facial recognition in Islamic countries where the hijab is common.

  Decide a means of promotion for the product or service

Decide a means of promotion for the product or service. Explain how exporting you product or service could affect value creation in the global context.

  Explain a business process and give an example

Explain a business process and give an example. Subordinate the book's methodology to the methodology you found in your research.

  Differences between public and private organizations

Needs actual hard copy Article and journal on topic below high-lite main idea. Attach copy of article.

  Would arise from eliminating the policy or service

Government creates many important and essential goods and services for our society, but over time

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd