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?

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?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter14: Corporation Accounting

Section: Chapter Questions

Problem 20MC: Which of the following is a measurement of earnings that represents the profit before interest,...

See similar textbooks

Similar questions

Communication (income statement): The balance of Interest Expense from accruing interest to be paid has what effect on the income statement in the current year? Multiple Choice A. Decreases net income. B. No effect. C. Increases net income.
which of the following transactions and events would result in animprovement in Interest Coverage Ratio?A. receiving cash for unearned sales revenueB. a payment of income tax owing from the previous periodC. an adjustment for accrued interest revenueD. A and B onlyE. A and C onlyF. B and C onlyG. All of the aboveH. None of the above
Which should be subtracted from the net income when using the indirectmethod? A. Loss on sale of investmentB. Amortization of patentC. Increase in accounts receivableD. Increase in accounts payable
interest covering ratio means a. how many times operating profit covers interest expense b. how many times interest covers operating profit c. how many times interest covers net profit d. how many times net profit covers interest expense
choose the right answer The debts which are to be repaid within a short period (a year or less) are referred to as, Contingent liabilities All the above Fixed liabilities Current Liabilities O choose the right answer Gross profit is Sales - Purchases O Cost of goods sold + Opening stock Sales - cost of goods sold Net profit - expenses
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
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 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
Return on assets The following data (in millions) were adapted from recent financial statements of Tootsie Roll Industries Inc. (TR): The percent a company adds to its cost of sales to determine selling price is called a markup. What is Tootsie Roll’s markup percent? Round to one decimal place.
Required: (a) You are required to calculate the following ratios:(i) Gross profit margin(ii) Operating profit margin(iii) Expenses to sales(iv) Return on Capital Employed(v) Asset turnover(vi) Non-current asset turnover(vii) Current Ratio(viii) Quick Ratio(ix) Inventory days(x) Receivables days(xi) Payable days(xii) Interest cover (b) In light of your calculations comment on the performance of the company over thelast two years.
Times interest earned is a measure of the a. gross profit compared to annual interest payments b. operational earnings of the firm (EBIT) compared to annual interest payments c. net earnings after taxes compared annual interest payments d. net earnings before taxes compared to annual interest payments
Note: If E=P28,091.16 and N = P11,213.00, what is the value of D? E= Total Earnings D=Deduction N = Net pay