Ask Question
BusinessBusiness
8 August, 13:19

JKL Corporation has a projected times-interest-earned ratio of 4.0 for next year. What percentage could EBIT decline next year before JKL's times-interest-earned ratio would fall below 1.0? 3% 30% 75% 90% 300% Insufficient information is provided.

+3
Answers (1)
  1. 8 August, 13:44
    0
    EBIT should fall by more than 75%

    Explanation:

    Interest cove is he number of times a company Earnings before interest and tax covers the interest payment.

    Current Interest cover = 4 times.

    This implies that the current EBIT is 4 times the interest payment, meaning that the interest payment would be 1.

    So for the interest cover to fall below a ratio of 1, then the EBIT should fall from 4 to a figure below 1, this will represent a change of 3 units

    The percentage decline should be greater than

    = (4-1/4) * 100

    = 75%

    So for the times interest earned to fall below 1, then the EBIT should fall by more than 75%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “JKL Corporation has a projected times-interest-earned ratio of 4.0 for next year. What percentage could EBIT decline next year before JKL's ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
A firm that responds to a regulatory rule in a way that permits technical compliance while allowing the firm to violate the spirit of the regulation has. become a captured regulator. engaged in a creative response to regulation.
Answers (1)
At Bargain Electronics, it costs $31 per unit ($20 variable and $11 fixed) to make an MP3 player at full capacity that normally sells for $49. A foreign wholesaler offers to buy 3,720 units at $28 each.
Answers (1)
3. What do you think Firestone did wrong in their approach in South America and the United States? Why do you think the company waited so long to tell customers about the problem?
Answers (1)
Cullumber, Inc., has outstanding bonds that will mature in six years and pay an 8 percent coupon semiannually. If you paid $1,033.85 today and your required rate of return was 6.6 percent. A. How much should you have paid for the bond? B.
Answers (1)
You have noticed that the A/R clerk has created an abnormally high number of credit memos. You also notice the inventory does not reflect the additional inventory resulting from the sales returns and allowances.
Answers (1)
New Questions in Business
Journalize the entries to record the following selected bond investment transactions for Starks Products: If an amount box does not require an entry, leave it blank. a. Purchased for cash $66,000 of Iceline, Inc.
Answers (1)
A permanent decline in the market value of an asset is called
Answers (1)
Which of the following should not be considered as an opportunity cost of attending college? (A) money spent on living expenses that are the same wether or not you attend the college (B) lost salaries (C) Business lunches (D) Interest that could
Answers (1)
Unger owes a total of $50,000 to eight unsecured creditors and one fully secured creditor. Quincy is one of the unsecured creditors and is owed $6,000.
Answers (1)
Given the following information, what are the values of M1 and M2? Small time deposits $650 billion Demand deposits and other checkable deposits $300 billion Savings deposits $750 billion Money market mutual funds $600 billion Traveler's checks $25
Answers (1)
Home » Business » JKL Corporation has a projected times-interest-earned ratio of 4.0 for next year. What percentage could EBIT decline next year before JKL's times-interest-earned ratio would fall below 1.0? 3% 30% 75% 90% 300% Insufficient information is provided.
Sign Up Forgot Password?