Iacouva Company reported the following on the company's income statement for two recent years: Current Year Prior Year Interest expense $5,000,000 $5,000,000 Income before income tax 3,500,000 6,000,000 a. Determine the times interest earned ratio for the current year and the prior year. Round to one decimal place. What conclusions can you draw? b.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Iacouva Company reported the following on the company's income statement for two
recent years:
Current Year
Prior Year
Interest expense
$5,000,000
$5,000,000
Income before income tax
3,500,000
6,000,000
a. Determine the times interest earned ratio for the current year and the prior year. Round
to one decimal place.
What conclusions can you draw?
b.
Transcribed Image Text:Iacouva Company reported the following on the company's income statement for two recent years: Current Year Prior Year Interest expense $5,000,000 $5,000,000 Income before income tax 3,500,000 6,000,000 a. Determine the times interest earned ratio for the current year and the prior year. Round to one decimal place. What conclusions can you draw? b.
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