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What percentage decline in earnings before interest

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Question - In 2016, Natural Selection, a nationwide computer dating service, had $518 million of assets and $209 million of liabilities. Earnings before interest and taxes were $129 million, interest expense was $29 million, the tax rate was 40 percent, principal repayment requirements were $24.9 million, and annual dividends were 30 cents per share on 21 million shares outstanding.

Required -

a. Calculate the following for Natural Selection:

i. Liabilities-to-equity ratio

ii. Times-interest-earned ratio

iii. Times burden covered

b. What percentage decline in earnings before interest and taxes could Natural Selection have sustained before failing to cover:

i. Interest payment requirements?

ii. Principal and interest requirements?

iii. Principal, interest, and common dividend payments?

Reference no: EM133173545

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