Peterson ebitda coverage ratio

Question

Problem:

Peterson Packaging Corp. has a basic earning power of 9% on $9 billion of total assets, and its times interest earned ratio is 3.0. Peterson's depreciation and amortization expense totals $1 billion. It has $0.6 billion in lease payments and $0.3 billion must go towards principal payments on outstanding loans and long-term debt.

Required:

Question: What is Peterson's EBITDA coverage ratio?

• 2.06
• 1.52
• 2.25
• 1.10
• 2.77

Note: Provide support for your rationale.