Use the following information from separate companies a through d:Net Income (Loss) Interest Expense Income Taxes$117,000111,60099,450120, 100a.b.C.d.Compute times interest earned. Which company indicates the strongest ability to pay interest expense as it comes dueTimes Interest InterestEarned Ratio CoverageCompute times interest earned.Complete this question by entering your answers in the tabs below.Company$46,80047,98836,7974,804abCd$29,25040,17641,76957,648Times Interest Earned RatioChoose Numerator:111111Choose Denominator:

TIMES INTEREST EARNED RATIOThe time interest earned ratio is the ratio between EBIT and interest…

Answered: Se the following information from…

Se the following information from separate companies a through d Net Income (Loss) Interest Expense Income Taxes $117,000 111,600 99,450 3. -1 4 120 $46,800 47,988 36,797 $29,250 40,176 41,769

Corporate Financial Accounting

15th Edition

ISBN:9781337398169

Author:Carl Warren, Jeff Jones

Publisher:Carl Warren, Jeff Jones

Chapter14: Financial Statement Analysis

Section: Chapter Questions

Problem 14.7BE: To determine: Times interest earned ratio Given info: Income before income tax and interest expense....

See similar textbooks

Related questions

Q: Required information Problem 12-3A (Algo) Allocating partnership income LO P2 Skip to question…

A: The partnership comes into existence when two or more persons agree to do the business and share…

Q: what are the other income, other deductions and other issues in Canada Taxation?

A: The objective of the question is to understand the various types of other income, other deductions,…

Q: Required information [The following information applies to the questions displayed below.] The…

A: VarianceVariance is the variation or difference between the budgeted or actual costs. Here, the…

Q: Question 40 of 50 View Policies -12 !!! Current Attempt in Progress Cullumber Co. uses…

A: The objective of the question is to calculate the amount by which the retained earnings were…

Q: A company just starting business made the following four inventory purchases in June June 1 10 320…

A: FIFO is first in first out method of inventory valuation under which inventories purchased or…

Q: Required: 1. Determine the total deferred tax asset and deferred tax liability amounts at December…

A: Deferred tax assets (DTA) and liabilities (DTL) account for temporary differences between accounting…

Q: Blossom Company's sales budget projects unit sales of part 1987 of 10,700 units in January, 12,200…

A: Production budget :— This budget is prepared to estimate the number of units to be produced for…

Q: The following information was taken from the annual manufacturing overhead cost budget of Indigo…

A: Lets understand the basics.Predetermine overhead rate is calculated in order to allocate overhead on…

Q: Giannini Incorporated, which produces and sells a single product, has provided the following…

A: Income statement is a financial statement that shows profitability, total revenue and total…

Q: Iguana, Incorporated, manufactures bamboo picture frames that sell for $25 each. Each frame requires…

A: Budgeted Income StatementA budgeted income statement is a basic financial report which forecasts…

Q: Logistics Solutions provides order fulfillment services for dot.com merchants. The company maintains…

A: Variance analysis is an analysis used to recognize the difference between actual behavior and…

Q: LeBron James (LBJ) Corporation agrees on January 1, 2025, to lease equipment from Sunland, Inc. for…

A: A lease is defined as a contractual agreement incorporated between two business entities where one…

Q: At December 31, 2024, Crane Industries reports the following selected accounts from the unadjusted…

A: Bad debt expenseAt the end of the accounting period, a financial statement is prepared by every…

Q: Mary Walker, president of Rusco Company, considers $22,000 to be the minimum cash balance for…

A: The cash flow statement is prepared at the end of the period to determine the cash position. It…

Q: Exercise 7-4 (Algo) Basic Segmented Income Statement [LO7-4] Royal Lawncare Company produces and…

A: Income statement :— It is one of the financial statements that shows profitability, total revenue…

Q: 3. Which of the following items must be depreciated? A. Inventory B. Land C. Machinery D. Capital…

A: Lets understand the basics.Depreciation is a reduction in value of asset due to wear and tear,…

Q: The inventory of Royal Decking consisted of five products. Information about ending inventory is as…

A: Lower of cost or market is an approach to valuation of inventory. The concept of lower of cost and…

Q: Shipping Expenses Manufacturing Overhead $800,000 $3,700,000 General & Administrative Expenses…

A: Gorss Profit Margin is calculated by subtracting cost of goods sold from sales. It is calculated…

Q: Hessel Corporation has two operating departments (Domestic and Global) and three service…

A: Reciprocal method of Service Department Cost AllocationThe reciprocal approach is a cost-allocation…

Q: Exercise 19-11 (Algo) Employee share purchase plan; MacroApps [LO19-3] MacroApps Corporation's…

A: Employee Stock Purchase Plan (ESPP)An Employee Stock Purchase Plan (ESPP) is a company-sponsored…

Q: S16-9 On January 6, 2023, Ling Corp. paid $5,000,000 for its 40 percent investment in True World…

A: To account for investments in other companies, there are generally two methods: the equity method…

Q: Depreciation by three methods; partial years Layton Company purchased tool sharpening equipment on…

A: Depreciation is defined as the method for assigning the cost of the physical or tangible asset over…

Q: For calendar year 2023, Stuart and Pamela Gibson file a joint return reflecting AGI of $323,900.…

A: From 2018 through 2025, the Tax Cuts and Jobs Act (TCJA) of 2017 limits the deduction for all state…

Q: Epps Musical Publishing Company purchased a copyright for $30,000 on January 1, Year 0, at which…

A: To calculate the amortization expense for the copyright in Year 3, we need to determine the…

Q: On January 1, 2021, the Excel Delivery Company purchased a delivery van for $50,000. At the end of…

A: Lets understand the basics.Depreciation is a reduction in value of asset due to wear and tear,…

Q: A company produced 10,000 units of product that were slightly defective. The cost of making this…

A: "Since you have asked multiple questions, we will solve first question for you. If you want any…

Q: The account balances of Sheridan Company at December 31, 2024, the end of the current year, show…

A: Bad debt expense refers to a loss that a company experiences when it sells goods or services on…

Q: * Your answer is incorrect. Sandhill Company started operations on January 1, 2015, and has used the…

A: Retained Earnings is the amount of the net income which is left over after paying the dividends to…

Q: Management of a T-shirt manufacturer believes if the company applies lean principles, then cycle…

A: It is being used to assess the efficiency of an organization's manufacturing process. And the…

Q: Whispering Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on…

A: Inventory refers to the stock of goods, raw materials, work- in- progress, or finished products…

Q: Marigold Corporation is authorized to issue 46,000 shares of $5 par value common stock. During 2025,…

A: A journal entry is a basic accounting record that is used to chronologically track financial…

Q: D P Required information [The following information applies to the questions displayed below] Suresh…

A: Cost reductions are frequently the main driver behind departmental eliminations. This might entail…

Q: Common stock-$10 par value, 110,000 shares authorized, 40,000 shares issued and outstanding Paid-in…

A: Shareholder EquityShareholder equity is a company's net worth and it is equal to the total amount…

Q: 2023 2024 2025 Net Income Computed Using Average-Cost Method FIFO Method $15,900 $19,170 17,880…

A: The first in first out method is one of the important methods of valuing inventory in which the…

Q: Exercise 11-47 (Algo) Net Realizable Value Method with By-Products (LO 11-7, 10) Butterfly Corp.…

A: The Joint cost allocation is the method that will assign the total common cost of producing an…

Q: The fact that generally accepted accounting principles allow companies flexibility in choosing…

A: Depreciation:It is the amount of reduction in the value of a tangible fixed asset due to tear and…

Q: Date August 1 August 4 August 11 August 13 August 20 August 26 August 29 Transactions Beginning…

A: The specific identification method relates to inventory valuation, specifically keeping track of…

Q: Crystal Charm Company makes handcrafted silver charms that attach to jewelry such as a necklace or…

A: Variance analysis is the difference between the standard performance and the actual performance,…

Q: Exercise 7-2A (Algo) Preparing a sales budget LO 7-2 Perez Company, which expects to start…

A: Sales revenue means the amount of income that are received by the sales of goods or services that…

Q: On July 15, Year 1, Blanca's office building burned to the ground due to an electrical fire. The…

A: Any recognized gain is the gain which has been computed for an assets under the section 1033, which…

Q: Volata Company began operations on January 1, 2019. In the second quarter of 2020, it adopted the…

A: Inventory valuationInventory valuation method is an accounting practice that is followed by each and…

Q: The president was told that the fixed expenses of $136,000 included $96,000 that between divisions…

A: Net income, which is the amount that's left over after all expenses and liabilities are subtracted,…

Q: Solaris Corporation prepared the following estimates for the four quarters of the current year:…

A: Net income is the amount earned by an entity after deducting the all expenses from the incomes. It…

Q: Imperial Jewelers manufactures and sells a gold bracelet for $400.00. The company's accounting…

A: Under analyzation we evaluate an offer to check its befit of loss. It means to check weather it…

Q: - All of his income is salary from his employer. Assume his modified AGI is $570,000.

A: An individual's or business's taxable income is multiplied by the applicable tax rates to determine…

Q: Income Statement and Earnings per Share for Discontinued Operations Apex Inc. reports the following…

A: Earnings per share is the part of entity's profit that is allocated to each outstanding common…

Q: State which statement is true or false The declining-balance method does not deduct the residual…

A: The declining-balance method does not deduct the residual value in computing the depreciation…

Q: Comparative data on three companies in the same service industry are given below. Required: 2. Fill…

A: Lets understand the basics.The margin ratio is a net operating income generated from the…

Q: On receiving the restricted stock, Dave made the 83(b) election. Dave's restricted shares will vest…

A: Grand date is the date on which the employer awards the shares to its employees there will not be…

Q: There were following activities occurred during the first month of Babara Schmidt's new hair cutting…

A: Journal Entry :— It is an act of recording transaction in books of account when transaction…

Question

Use the following information from separate companies a through d:
Net Income (Loss) Interest Expense Income Taxes
$117,000
111,600
99,450
120, 100
a.
b.
C.
d.
Compute times interest earned. Which company indicates the strongest ability to pay interest expense as it comes due
Times Interest Interest
Earned Ratio Coverage
Compute times interest earned.
Complete this question by entering your answers in the tabs below.
Company
$46,800
47,988
36,797
4,804
a
b
C
d
$29,250
40,176
41,769
57,648
Times Interest Earned Ratio
Choose Numerator:
1
1
1
1
1
1
Choose Denominator:
<Times Interest Earned Ratio
H
=
II
=
=
-
II
Ratio
times
times
times
times
Interest Coverage >

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Times Interest Earned Ratio -

VIEW

Step 2: Calculation Of The Income Before Interest & Tax -

VIEW

Step 3: Times Interest Earned -

VIEW

Solution

VIEW

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Using this data, compute the company’s value of interest coverage ratio:Net Income: 140Income tax expense: 110Interest expense: 50a) 6b) 3.75c) 4.75d) 6.25
Use the following information from separate companies a through d: Net Income (Loss) Interest Expense Income Taxes a. $ 111, 000 $ 59, 940 $ 27, 750 b. 105, 600 25, 344 38,016 c. 94, 350 25, 475 39, 627 d . 114, 100 4,564 54,768 Compute times interest earned. Which company indicates the strongest ability to pay interest expense as it comes due?
Assume you are given the following relationships for the Haslam Corporation: Sales/total assets 1.2 Return on assets (ROA) 3% Return on equity (ROE) 5% Calculate Haslam's profit margin and liabilities-to-assets ratio. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: % Liabilities-to-assets ratio: % Suppose half of its liabilities are in the form of debt. Calculate the debt-to-assets ratio. Do not round intermediate calculations. Round your answer to two decimal places.
Use the financial ratios of company A and company B to answer the questions below. Company A Company B Yr t+1 Year t Yr t+1 Year t Current ratio 0.55 0.59 0.56 0.55 Accounts receivable turnover 6.22 6.25 5.06 4.87 Debt to total assets 40.5% 40% 67.8% 65.9% Times interest earned 8.80 30.6 5.97 6.33 Free cash flows (in millions) ($3,819) $3,173 $168 $550 Return on stockholders’equity 7.7% 7.7% 26.6% 23.3% Return on assets 4.3% 4.3% 8.9% 7.9% Profit margin…
Assume you are given the following relationships for the Haslam Corporation: Sales/total assets 1.2 Retum on assets (ROA) 4% Return on equity (ROE) 5% Calculate Haslam's profit margin and liabilities-to-assets ratio. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: % Liabilities-to-assets ratio: % Suppose half of its liabilities are in the form of debt. Calculate the debt-to-assets ratio. Do not round intermediate calculations. Round your answer to two decimal places. %
Refer to the following selected financial information from Gomez Electronics. Compute the company's times interest earned for Year 2. Net sales. Cost of goods sold Interest expense Net income before tax Net income after tax Total assets Total liabilities Total equity Multiple Choice O O O O 4.5. 5.5. 7.6. 13.6. 6.6. Year 2 $ 481,500 276,900 10,300 67,850 46,650 318,300 178,400 139,900 Year 1 $ 426,850 250, 720 11,300 53,280 40,500 291,600 167,900 123,700
Consider this simplified balance sheet for Geomorph Trading: Current assets Long-term assets $ 245 Current liabilities Long-term debt 630 Other liabilities Equity $ 875 Required: a. What is the company's debt-equity ratio? (Hint: debt = Current liabilities, Long-term debt, and Other liabilities) Note: Round your answer to 2 decimal places. b. What is the ratio of total long-term debt to total long-term capital? Note: Round your answer to 2 decimal places. c. What is its net working capital? d. What is its current ratio? Note: Round your answer to 2 decimal places. $ 170 215 140 350 $ 875 a Debt-equity ratio b. Long-term debt-to-capital ratio c. Net working capital d. Current ratio
All-Hands Property & Casualty Insurance Company has the following financial ratios. 2019 2018 Loss Ratio 67.8 68.1 Expense Ratio 24.2 25.1 Net Investment Yield 3.5 4.0 a. Calculate the Combined Ratio {Loss Ratio + Expense Ratio} for each year. Combined Ratio 2019 Combined Ratio 2018 b. Calculate the Overall Profitability Ratios Overall Profitability Ratio 2019 Overall Profitability Ratio 2018 why the Overall Profitability Ratio Changed in 2019 Based on the Loss Ratio, Expense Ratio, and Net Investment Yield Trends?
Using the income statement for Times Mirror and Glass Co., compute the following ratios: TIMES MIRROR AND GLASS Co. Income Statement Sales Cost of goods sold Gross profit Selling and administrative expense Lease expense Operating profit* Interest expense Earnings before taxes Taxes (30%) Earnings after taxes *Equals income before interest and taxes. a.Compute the interest Interest coverage ge ratio. (Round yo times $ 223,000 130,000 $ 93,000 44,000 19,100 $ 29,900 10,600 times $ 19,300 7,720 $ 11,580 answer to 2 decimal places.) b.Compute the fixed charge coverage ratio. (Round your answer to 2 decimal places.) Fixed charge coverage
Compute the component percentages for Trixy Magic's Income statement below. (Enter your answers as a percentage rounded to 2 decimal place (i.e. 0.1234 should be entered as 12.34). Enter all answers as positive values.) Net sales Cost of sales Gross margin Expenses Selling, general, and administrative Depreciation Interest-net Total expenses Pre-tax earnings Income tax provision Net earnings TRIXY MAGIC, INC. Consolidated Statements of Earnings (in millions) Fiscal 2018 $ $ 48,236 31,732 16,504 11,093 1,547 294 12,934 3,570 1,328 2,242 % Sales 100.00 % % Fiscal Years Ended on % Sales Fiscal 2017 $ $ 48,284 31,558 16,726 10,534 1,373 201 12,108 4,618 1,719 2,899 100.00 % % Fiscal 2016 % Sales S 46,930 30.741 16,198 ३ 9,746 1,171 156 11,073 5,125 1,910 3.215 100.00 %
Use the following income statement of Elliott Game Theory Consulting to determine its net operating profit after taxes (NOPAT). Use 25% as the tax rate. Elliott Game Theory Consulting Income Statement for Year Ending December 31
A Preparation of Ratios Refer to the financial statements for Burch Industries in Problem 12-89A and the following data. Required: 1. Prepare all the financial ratios for Burch for 2019 and 2018 (using percentage terms where appropriate and rounding all answers to two decimal places). 2. CONCEPTUAL CONNECTION Explain whether Burchs short-term liquidity is adequate. 3. CONCEPTUAL CONNECTION Discuss whether Burch uses its assets efficiently. 4. CONCEPTUAL CONNECTION Determine whether Burch is profitable. 5. CONCEPTUAL CONNECTION Discuss whether long-term creditors should regard Burch as a high-risk or a low-risk firm. 6. Perform a Dupont analysis (rounding to two decimal places) for 2018 and 2019.