if a probability is less than the smallest number on the chart, just answer the question “< 0.10%” (smallest value on the chart) or you can find the probability using Excel.

1. What is the probability of Coverage Ratio (CR) < 1.0?
2. What is the probability of a CR < 3.0
3. What is the maximum amount of debt the company can service and have a 3% probability that the coverage ratio will fall to 1.0 or less?
4. What is the maximum amount of debt the company can service and have a 10% probability that the coverage ratio will fall to 1.0 or less?
5. If the interest rate on debt is 14% instead of 12% and all other values in Table 1 are in effect, what is the probability of having a coverage ratio less than 1.0?
6. If the interest rate is 14%, what debt ratio corresponds to a probability of a CR < 1 of 15%?
7. What is the probability that the company’s EBIT will be 0 or less? (hint: an EBIT of 0 corresponds what value for ROA? Calculate a Z-score for that ROA)
8. Table 1. Given information

Expected ROA	16%
STD DEV ROA	4%
Assets	$8,000 M
Interest rate	12%
Debt	$2,000 M