A company’s income before interest expense and income taxes in 2010 is $225,000 and $200,000 in 2011. Its interest expense was $45,000 for each year. Calculate the company’s times interest earned ratio for 2010 and 2011 and then comment on the level of risk. 2010: 2011: Comment on its level of risk.
A company’s income before interest expense and income taxes in 2010 is $225,000 and $200,000 in 2011. Its interest expense was $45,000 for each year. Calculate the company’s times interest earned ratio for 2010 and 2011 and then comment on the level of risk. 2010: 2011: Comment on its level of risk.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A company’s income before interest expense and income taxes in 2010 is $225,000 and $200,000 in 2011. Its interest expense was $45,000 for each year. Calculate the company’s times interest earned ratio for 2010 and 2011 and then comment on the level of risk.
2010:
2011:
Comment on its level of risk.
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