Question

Chutes​ & co. has interest expense of $1.55 million and an operating margin of 10.5% on total sales of $29.8 million. what is​ chutes' interest coverage​ ratio

Answer 1

times interest earned or interest coverage ratio = 2.02

Step-by-step explanation:

operating margin 10.5%

operating income/ sales = 10.5%

operating income = sales x 10.5% = 3,129,000

operating income / interest expense

3,129,000/1,550,000 = 2.018709677 = 2.02

The company can pay their interest two times.