Question 3 a) The net profit of Rexit Autos Inc. for the most recent year...

Name: Question 3 a) The net profit of Rexit Autos Inc for the mos
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Question 3 a) The net profit of Rexit Autos Inc. for the most recent year available was $6,250. The tax rate reached 34%. The company paid $2,235 in interest and deducted $1,450 in depreciation for the year. What was the company's pre-amortization interest coverage ratio for that year? b) Here is some information about a company's last fiscal year. Sales are $250,000, cost of goods sold $80,000, depreciation for the year $27,000 and additions to retained earnings $33,360. Currently 20,000 common shares of this company are outstanding and, the previous year, each yielded $1.50 in dividends. Assuming the tax rate is 34%, determine the interest coverage ratio for the last fiscal year. c) Based on the two previous problems, draw up a provisional balance sheet which indicates the external financing required. Assume that revenue will increase by 15%, but the company will not incur any new external debt or resort to equity financing.

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