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Exercise 9-14 Computing and interpreting times interest earned LO A1 Use the following information from separate...
Exercise 9-14 Computing and interpreting times interest earned LO A1
Use the following information from separate companies a through f:
| Net Income (Loss) | Interest Expense | Income Taxes | |||||||
| a. | $ | 163,000 | $ | 55,420 | $ | 40,750 | |||
| b. | 157,600 | 36,248 | 56,736 | ||||||
| c. | 166,100 | 8,305 | 79,728 | ||||||
| d. | 138,550 | 33,252 | 58,191 | ||||||
| e. | 105,950 | 22,250 | 40,261 | ||||||
| f. | (45,640 | ) | 97,213 | 0 | |||||
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Solutions
Expert Solution
Answer in 2 decimal place
| 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 | $ 259,170 | / | $ 55,420 | = | 4.68 | times |
| b | $ 250,584 | / | $ 36,248 | = | 6.91 | times |
| c | $ 254,133 | / | $ 8,305 | = | 30.60 | times |
| d | $ 229,993 | / | $ 33,252 | = | 6.92 | times |
| e | $ 168,461 | / | $ 22,250 | = | 7.57 | times |
| f | $ 51,573 | / | $ 97,213 | = | 0.53 | times |
Answer in 1 decimal place
| 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 | $ 259,170 | / | $ 55,420 | = | 4.7 | times |
| b | $ 250,584 | / | $ 36,248 | = | 6.9 | times |
| c | $ 254,133 | / | $ 8,305 | = | 30.6 | times |
| d | $ 229,993 | / | $ 33,252 | = | 6.9 | times |
| e | $ 168,461 | / | $ 22,250 | = | 7.6 | times |
| f | $ 51,573 | / | $ 97,213 | = | 0.5 | times |
Working
| Company | ||||
| Net income (A) | Interest expense (B) | Income taxes (C ) | Income before interest and taxes (A+B+C) | |
| a | $ 163,000 | $ 55,420 | $ 40,750 | $ 259,170 |
| b | $ 157,600 | $ 36,248 | $ 56,736 | $ 250,584 |
| c | $ 166,100 | $ 8,305 | $ 79,728 | $ 254,133 |
| d | $ 138,550 | $ 33,252 | $ 58,191 | $ 229,993 |
| e | $ 105,950 | $ 22,250 | $ 40,261 | $ 168,461 |
| f | -$ 45,640 | $ 97,213 | $ 0 | $ 51,573 |
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