Final answer:
The interest coverage ratio is a financial metric that measures a company's ability to cover its interest expense with its operating income. Chutes Co.'s interest coverage ratio is .
Step-by-step explanation:
The interest coverage ratio is a financial metric that measures a company's ability to cover its interest expense with its operating income. It is calculated by dividing the operating income by the interest expense. In this case, we are given that Chutes Co. has an operating margin of , which means that for every dollar of sales, they generate in operating income. We are also given that the interest expense is million. To find the interest coverage ratio, we divide the operating income by the interest expense:
Interest Coverage Ratio = Operating Income / Interest Expense
Interest Coverage Ratio = /
Therefore, Chutes Co.'s interest coverage ratio is . This means that the company earns times more operating income than what it pays in interest expense.