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Atlantic's statement of Income is as follows (in million $): Net sales $658 Other Income 8 666 Costs and expenses: Costs of product sold Selling, general, and administrative expenses Interest expenses 418 196 16 630 Income before income taxes and extraordinary charges 36 Income taxes 18 Income before extraordinary charges Extraordinary charges 18 4 Net income $14 Note: Operating lease payment $200 million and preferred dividend total $50 million. Marginal tax rate 50%

Atlantic's statement of Income is as follows (in million $): Net sales $658 Other Income 8 666 Costs and expenses: Costs of product sold Selling, general, and administrative expenses Interest expenses 418 196 16 630 Income before income taxes and extraordinary charges 36 Income taxes 18 Income before extraordinary charges Extraordinary charges 18 4 Net income $14 Note: Operating lease payment $200 million and preferred dividend total $50 million. Marginal tax rate 50%

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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a) Compute the times-interest earned and give the interpretation.
b) Compute the fixed charge coverage and give the interpretation.

Atlantic's statement of Income is as follows (in million $): Net sales $658 Other Income 8. 666 Costs and expenses: Costs of product sold Selling, general, and administrative expenses Interest expenses 418 196 16 630 Income before income taxes and extraordinary charges 36 Income taxes 18 Income before extraordinary charges Extraordinary charges 18 4 Net income $14 Note: Operating lease payment $200 million and preferred dividend total $50 million. Marginal tax rate 50%
Transcribed Image Text:Atlantic's statement of Income is as follows (in million $): Net sales $658 Other Income 8. 666 Costs and expenses: Costs of product sold Selling, general, and administrative expenses Interest expenses 418 196 16 630 Income before income taxes and extraordinary charges 36 Income taxes 18 Income before extraordinary charges Extraordinary charges 18 4 Net income $14 Note: Operating lease payment $200 million and preferred dividend total $50 million. Marginal tax rate 50%
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