Problem 3-16 Calculating the Cash Coverage Ratio Terrell, Inc.'s net income for the most recent year was $16,950. The tax rate was 24 percent. The firm paid $4,030 in total interest expense and deducted $5,420 in depreciation expense. What was the company's cash coverage ratio for the year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Cash coverage ratio times
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Cash flow from operations = Net income + Depreciation expense + Tax expense Tax expense = Net income * Tax rate Tax expense = $16,950 * 0.24 = $4,068 Cash flow from operations = $16,950 + $5,420 + $4,068 = $26,438 Show more…
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