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2- Boehm-Gau Real Estate Speculators, Inc has the following EBIT and debt- servicing burden: BOEHM-GAU Expected EBIT $5600000
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Answer #1

1. Interest Coverage ratio = EBIT / Interest

Interest Coverage ratio = 5600000 / 1597400

Interest Coverage ratio = 3.51 times

2. Debt service coverage ratio = EBIT / (Interest + Principal)

Debt service coverage ratio = 5600000 / (1597400 + 2600000)

Debt service coverage ratio = 1.33 Times

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