Answer: 1.27x

## Explanation The FCFE coverage ratio measures a company's ability to pay dividends and repurchase stock from its free cash flow to equity. The formula is: \[ \text{FCFE Coverage Ratio} = \frac{\text{FCFE}}{\text{Dividends + Share Repurchases}} \] Given: - FCFE = $492 million - Dividends paid = $215 million - Stock repurchases = $173 million \[ \text{FCFE Coverage Ratio} = \frac{492}{215 + 173} = \frac{492}{388} = 1.268 \] This rounds to **1.27x**, which corresponds to **Option A**. ### Key Points: - The FCFE coverage ratio indicates how many times the company can cover its shareholder distributions (dividends + repurchases) from its free cash flow to equity - A ratio greater than 1 indicates the company generates sufficient FCFE to cover shareholder distributions - A ratio of 1.27x means the company can cover its shareholder distributions 1.27 times over

Author: LeetQuiz .