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Ziebart Corp.'s EBITDA last year was $250,000 ( = EBIT + depreciation + amortization), its interest...

Ziebart Corp.'s EBITDA last year was $250,000 ( = EBIT + depreciation + amortization), its interest charges were $9,500, it had to repay $26,000 of long-term debt, and it had to make a payment of $17,400 under a long-term lease. The firm had no amortization charges. What was the EBITDA coverage ratio?

Select the correct answer.

a. 3.51
b. 4.28
c. 5.05
d. 5.82
e. 6.59
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Answer #1

EBITDA Coverage Ratio

= (EBITDA + Lease payments)/(Interest payments + Principal Payments + Lease Payments)

= (250000 + 17400)/(9500 + 26000 + 17400)

= 5.05

choose c)

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