Sales are $3.70 million, cost of goods sold is $550,000, depreciation expense is $140,000, other operating expenses is $290,000. addition to retained

Sales are $3.70 million, cost of goods sold is $550,000, depreciation expense is $140,000, other operating expenses is $290,000. addition to retained earnings is $1,766,625, dividends per share are $1, tax rate is 21 percent, and number of shares of common stock outstanding is 80,000. Lafonya's Flop Shops has no preferred stock outstanding.

Use the above information to calculate the times interest earned ratio for LaTonya's Flop Shops, Inc. (Round your answer to 2 decimal places.)

Interest earned ________ times

Expert Solution

EBIT = Sales - cost of goods sold - depreciation expense - other operating expense
= $3,700,000 - $550,000 - $140,000 - $290,000
= $2,720,000

Net income = Addition to retained earnings + Dividends
= $1,766,625 + ($1 * 80,000)
= $1,846,625

EBT = Net income / (1 - tax rate)
= $1,846,625 / (1 - 21%)
= $2,337,500

Interest earned ratio = EBIT / (EBIT - EBT)
= $2,720,000 / ($2,720,000 - $2,337,500)
= $2,720,000 / $382,500
= 7.11

Interest earned ratio = 7.11 times.

Junaid answered 2 years ago

sales are1.53 million, cost of goods sold is 615000, depriciation, expense is 153,000, other operating expenses...

sales are1.53 million, cost of goods sold is 615000, depriciation, expense is 153,000, other operating expenses is $303,000 addition to retained earnings is 145,700,dividends per share is $1,tax rate is 30 percent,and number of shares of common stock outstanding is 93,000 Latonya's Flop Shops has no preferred stock outstanding. use above info to calculate the times interest earned ratio for Latonya's Flop Shops, inc (rd your ans to 2 decimal places

2013 2014 Sales $2100 Cost of Goods Sold $1200 Other operating expenses $200 Depreciation Expense $225...

2013 2014 Sales $2100 Cost of Goods Sold $1200 Other operating expenses $200 Depreciation Expense $225 Interest Expense $175 Current Assets $1000 $1300 Total Fixed Assets $3500 $4000 Accumulated Depreciation $1250 This can be determined from the information given Current Liabilities $900 $975 Long-term Debt $1500 $1350 Common Stock $400 This can be determined from the information given A company has the financial data above for years 2013 and 2014. The average tax rate is 35% and the dividend payout...

BOK has sales of $500,000, Cost of Goods Sold of $140,000, administrative expenses of $20,000 depreciation...

BOK has sales of $500,000, Cost of Goods Sold of $140,000, administrative expenses of $20,000 depreciation expense of $10,000, and interest expense of $30,000. What is the net income for the firm using the following tax schedule? Taxable Income Tax Rate $ 1-50,000 10% $ 50,001-75,000 20% $ 75,001-100,000 30% $100,001-335,000 40% $335,001 + 50%

For the most recent year, Camargo, Inc., had sales of $550,000, cost of goods sold of $245,320, depreciation expense of $62,400, and additions to retained earnings of $74,800.

For the most recent year, Camargo, Inc., had sales of $550,000, cost of goods sold of $245,320, depreciation expense of $62,400, and additions to retained earnings of $74,800. The firm currently has 22,000 shares of common stock outstanding and the previous year’s dividends per share were $1.30.Assuming a 24 percent income tax rate, what was the times interest earned ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

XYZ Company Income Statement Sales $140,000 Cost of Goods Sold 117,000 Gross Profit 23,000 Operating Expenses...

XYZ Company Income Statement Sales $140,000 Cost of Goods Sold 117,000 Gross Profit 23,000 Operating Expenses 12,830 EBIT 10,170 Taxes @39% 2168 Net income 3,392 Dividend 1,018 Addition to Retained Earnings $2,374 XYZ Company Balance Sheet Current Assets Cash $7,500 Accounts Receivable 12,100 Inventory 10,400 Prepaid Items 5,900 Other CA 4,300 Total Current Assets $40,200 Net Plant $ Equipment 82,300 Total Assets $122,500 XYZ Company Balance Sheet Current Liabilities Accounts Payable $7,200 Wages Payable 3,600 Notes payable 5,400 Taxes Payable...

Kaler Company has sales of $1,410,000, cost of goods sold of $785,000, other operating expenses of...

Kaler Company has sales of $1,410,000, cost of goods sold of $785,000, other operating expenses of $198,000, average invested assets of $4,400,000, and a hurdle rate of 11 percent. Required: 1. Determine Kaler’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin answer to the nearest whole percentage, (i.e., 0.1234 should be entered as 12%). Round your Investment Turnover answers to 4 decimal places.) Please calculate...

Solano Company has sales of $700,000, cost of goods sold of $470,000, other operating expenses of...

Solano Company has sales of $700,000, cost of goods sold of $470,000, other operating expenses of $50,000, average invested assets of $2,100,000, and a hurdle rate of 9 percent. Required: 1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. 2. Several possible changes that Solano could face in the upcoming year follow. Determine each scenario’s impact on Solano’s ROI and residual income. (Note: Treat each scenario independently.) a. Company sales and cost of goods sold...

Solano Company has sales of $760,000, cost of goods sold of $500,000, other operating expenses of...

Solano Company has sales of $760,000, cost of goods sold of $500,000, other operating expenses of $40,000, average invested assets of $2,250,000, and a hurdle rate of 11 percent. 1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.) 2....

Kaler Company has sales of $1,450,000, cost of goods sold of $795,000, other operating expenses of...

Kaler Company has sales of $1,450,000, cost of goods sold of $795,000, other operating expenses of $208,000, average invested assets of $4,600,000, and a hurdle rate of 12 percent. Required: 1. Determine Kaler’s return on investment (ROI), investment turnover, profit margin, and residual income. 2. Several possible changes that Kaler could face in the upcoming year follow. Determine each scenario’s impact on Kaler’s ROI and residual income. (Note: Treat each scenario independently.) a. Company sales and cost of goods sold...

Solano Company has sales of $720,000, cost of goods sold of $480,000, other operating expenses of...

Solano Company has sales of $720,000, cost of goods sold of $480,000, other operating expenses of $45,000, average invested assets of $2,150,000, and a hurdle rate of 10 percent. 1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.) Return...

Question