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31 March, 04:54

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

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  1. 31 March, 06:28
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    times interest earned or interest coverage ratio = 2.02

    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.
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