Principles of Financial Accounting.
24th Edition
ISBN: 9781260158601
Author: Wild
Publisher: MCG
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Question
Chapter 11, Problem 1AA
1.
To determine
Compute times interest earned for the fiscal years ended 2017, 2016, and 2015.
2.
To determine
Identify whether Company A is in a good and bad position to pay its interest obligations by assuming an industry average of 10.
3.
To determine
Identify Company A’s total accrued expenses.
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Please describe what is meant by “Times Interest Earned.” How is it calculated? Suppose you calculated this ratio for a company for two consecutive years and the results were the following:
year 2018 – 24.0 year 2017 – 28.0
Please interpret the results. What conclusions can you draw?
The following financial information was obtained from the year ended 2024 income statements for Luigi Automotive and Steinbeck Automotive:
(Click the icon to view the financial information.)
Requirements
1. Compute the times-interest-earned ratio for each company. Round to two decimals.
2.
Which company was better able to cover its interest expense?
Requirement 1. Compute the times-interest-earned ratio for each company. Round to two decimals.
Begin by showing the formula for the times-interest-earned ratio.
Times-interest-earned ratio =
C--)
Data table
Net income
Income tax expense
Interest expense
Print
$
Luigi Steinbeck
52,395 $
20,590
550
Done
89,990
26,260
3,100
X
Refer to Apple’s financial statements. Compute its profit margin for the years ended September 30, 2017, and September 24, 2016.
Chapter 11 Solutions
Principles of Financial Accounting.
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