Reference no: EM132847066
Question - In 2016, Natural Selection, a nationwide computer dating service, had $520 million of assets and $210 million of liabilities. Earnings before interest and taxes were $130 million, interest expense was $29 million, the tax rate was 40 percent, principal repayment requirements were $25 million, and annual dividends were 25 cents per share on 20 million shares outstanding.
a. Calculate the following for Natural Selection:
Liabilities-to-equity ratio?
Times- interest- earned ratio?
Times burden covered?
b. What percentage decline in earnings before interest and taxes could Natural Selection have sustained before failing to cover:
Interest payment requirements?
Principal and interest requirements?
Principal, interest, and common dividend payments?