Question

Net cash provided by operating expense $340,200, average current liabilities $152,000, average long-term liabilities $91,000, dividends declared $60,000, capital expenditures $100,000, payments of debt $36,000. What is the cash debt coverage?

A. 2.3
B. 3.1
C. 4.7
D. 5.9

Answer 1

The cash debt coverage ratio is calculated by dividing net cash provided from operating activities by the average total liabilities. With the provided numbers, the cash debt coverage is approximately 1.4, which is not an option in the question's answers.

Step-by-step explanation:

The student is asking about cash debt coverage, a financial ratio that indicates the ability of a company to repay its total debt with the cash generated from its operating activities. To calculate this, use the formula: Cash Debt Coverage = Net Cash Provided by Operating Activities / Average Total Liabilities.

The provided information includes a net cash provided by operating activities of $340,200, average current liabilities of $152,000, and average long-term liabilities of $91,000. The total average liabilities would then be the sum of average current and long-term liabilities ($152,000 + $91,000 = $243,000). Using the formula:

Cash Debt Coverage = $340,200 / $243,000 ≈ 1.4

This result is not listed in the multiple-choice options (A, B, C, D), which suggests there might be an error in the question or answer choices provided.