Use the following information from separate companies a through f: Net Income (Loss) Interest Expense Income...

Use the following information from separate companies a through f:

	Net Income (Loss)			Interest Expense		Income Taxes
a.	$	200,000		$	96,000	$	50,000
b.		194,600			75,894		70,056
c.		203,100			8,124		97,488
d.		170,000			40,800		71,400
e.		130,000			16,900		49,400
f.		(56,000	)		72,800		0

Compute times interest earned.

Expert Solution

Times interest earned ratio
Company	Choose Numerator	/	Choose Denominator	=	Times interest earned ratio
	Income before interest and taxes	/	Interest expense	=	Times interest earned ratio
a.	$346,000	/	$96,000	=	3.60
b.	$340,550	/	$75,894	=	4.49
c.	$308,712	/	$8,124	=	38
d.	$282,200	/	$40,800	=	6.92
e.	$196,300	/	$16,900	=	11.61
f.	$16,800	/	$72,800	=	0.23

Explanation :

Income before interest and taxes = Net income + Interest + Income taxes

Company A :

Income before interest and taxes = $200,000 + $96,000 + $50,000

= $346,000

ekkarill92 answered 2 years ago

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