In 2010, Natural selection, a nationwide computer dating service, had $500 million of assets and $200 million of liabilities. Earnings before interest and taxes were $120 million of liabilities. Earnings before interest and taxes were $120 million, interest expense was $28 million, and the tax rate was 40 percent, principal repayment requirements were $24 million and annual dividends were 30 cents per share on 20 million shares outstanding:
A. calculate:
- Natural selections liabilities - to - equity ratio
- Times interest earned ratio
- Times burden covered
B. What percentage decline in earnings before interest and taxes could natural selection have sustained before failing cover:
- Interest payment requirements?
- Principal and interest requirements?
• Principal, interest, and common dividend payments?