The Canada Technology Corporation (CTC) financial statements below: CTC's long-term debt bears interest at 6%. During the year ended December 31, 2020, CTC's times-interest-earned ratio was: a) 100 timesb) 110 times c) 117 times d) 125 times 7/23/23, 8:55 PMNet revenueCost of goods soldGross profitOperating expenses:Selling, general, and administrativeResearch, development, and engineeringSpecial chargesCanada Technology CorporationConsolidated Statements of Income(in millions, except per share amounts)Total operating expensesOperating incomeInvestment and other income (loss), netIncome before income taxesIncome tax expenseNet incomeEarnings per common share:Basic$Consolidated income statements$Years Ended December 31,202041,444 $33,8927,5523,5444644,0083,5441803,7241,079$ 2,645 $1.03 $201935,404 $29,0556,3493,0504553,5052,8441833,0279052,122 $0.82 $201831,16825,6615,5072,7844524823,7181,789(58)1,7314851,2460.48 7/23/23, 8:55 PMAssetsCurrent assets:Canada Technology CorporationConsolidated Statements of Financial Position(in millions)Cash and cash equivalentsShort-term investmentsAccounts receivable, netInventoriesOtherTotal current assetsProperty, plant, and equipment, netInvestmentsOther non-current assetsTotal assetsLiabilities and Shareholders' EquityCurrent liabilities:Accounts payableAccrued and otherTotal current liabilitiesLong-term debtOther non-current liabilitiesCommitments and contingent liabilitiesTotal liabilitiesShareholders' equity:Preferred shares; shares issued: 0Common shares; shares authorized: 7,000;shares issued: 2,556 and 2,579, respectivelyRetained earningsOther comprehensive lossOtherConsolidated balance sheetsTotal shareholders' equityTotal liabilities and shareholders' equity$$$December 31,20204,317 $8353,6353271,51910,6331,5176,77039119,311 $7,316 $3,58010,8965051,63013,0312846,131(83)(52)6,280$ 19,311 $20194,2324062,5863061,3948,9249135,26736615,4705,9892,9448,9335061,15810,5971,4793,486(33)(59)4,87315,470

Times-interest-earned ratio shows a relationship between the company’s income and its debt. It is a…

Canada Technology Corporation Consolidated Statements of Income (in millions, except per share amounts) Net revenue Cost of goods sold Gross profit Operating expenses: Selling, general, and administrative Research, development, and engineering Special charges Total operating expenses Operating income Investment and other income (loss), net Income before income taxes Income tax expense Net income Earnings per common share: Basic $ $ $ Years Ended December 31, 2018 2020 41,444 $ 33,892 7,552 3,544 464 4,008 3,544 180 3,724 1,079 2,645 $ 1.03 $ 2019 35,404 $ 29,055 6,349 3,050 455 3,505 2,844 183 3,027 905 2,122 $ 0.82 $ 31,168 25,661 5,507 2,784 452 482 3,718 1,789 (58) 1,731 485 1,246 0.48

Canada Technology Corporation Consolidated Statements of Income (in millions, except per share amounts) Net revenue Cost of goods sold Gross profit Operating expenses: Selling, general, and administrative Research, development, and engineering Special charges Total operating expenses Operating income Investment and other income (loss), net Income before income taxes Income tax expense Net income Earnings per common share: Basic $ $ $ Years Ended December 31, 2018 2020 41,444 $ 33,892 7,552 3,544 464 4,008 3,544 180 3,724 1,079 2,645 $ 1.03 $ 2019 35,404 $ 29,055 6,349 3,050 455 3,505 2,844 183 3,027 905 2,122 $ 0.82 $ 31,168 25,661 5,507 2,784 452 482 3,718 1,789 (58) 1,731 485 1,246 0.48

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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Question

The Canada Technology Corporation (CTC) financial statements below:

CTC's long-term debt bears interest at 6%. During the year ended December 31, 2020, CTC's times-interest-earned ratio was:

a) 100 times

b) 110 times

c) 117 times

d) 125 times

7/23/23, 8:55 PM
Net revenue
Cost of goods sold
Gross profit
Operating expenses:
Selling, general, and administrative
Research, development, and engineering
Special charges
Canada Technology Corporation
Consolidated Statements of Income
(in millions, except per share amounts)
Total operating expenses
Operating income
Investment and other income (loss), net
Income before income taxes
Income tax expense
Net income
Earnings per common share:
Basic
$
Consolidated income statements
$
Years Ended December 31,
2020
41,444 $
33,892
7,552
3,544
464
4,008
3,544
180
3,724
1,079
$ 2,645 $
1.03 $
2019
35,404 $
29,055
6,349
3,050
455
3,505
2,844
183
3,027
905
2,122 $
0.82 $
2018
31,168
25,661
5,507
2,784
452
482
3,718
1,789
(58)
1,731
485
1,246
0.48

7/23/23, 8:55 PM
Assets
Current assets:
Canada Technology Corporation
Consolidated Statements of Financial Position
(in millions)
Cash and cash equivalents
Short-term investments
Accounts receivable, net
Inventories
Other
Total current assets
Property, plant, and equipment, net
Investments
Other non-current assets
Total assets
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable
Accrued and other
Total current liabilities
Long-term debt
Other non-current liabilities
Commitments and contingent liabilities
Total liabilities
Shareholders' equity:
Preferred shares; shares issued: 0
Common shares; shares authorized: 7,000;
shares issued: 2,556 and 2,579, respectively
Retained earnings
Other comprehensive loss
Other
Consolidated balance sheets
Total shareholders' equity
Total liabilities and shareholders' equity
$
$
$
December 31,
2020
4,317 $
835
3,635
327
1,519
10,633
1,517
6,770
391
19,311 $
7,316 $
3,580
10,896
505
1,630
13,031
284
6,131
(83)
(52)
6,280
$ 19,311 $
2019
4,232
406
2,586
306
1,394
8,924
913
5,267
366
15,470
5,989
2,944
8,933
506
1,158
10,597
1,479
3,486
(33)
(59)
4,873
15,470

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