The following financial information was obtained from the year ended 2024 income statements for Luigi Automotive and Peterson Automotive: (Click the icon to view the financial information.) Requirements 1. Compute the times-interest-earned ratio for each company. Round to two decimals. 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. (Net income + Income tax expense + Interest expense) + Income tax expense (Net income + Income tax expense + Interest expense) + Interest expense (Net income + Income tax expense + Interest expense) + Net income (Net income - Income tax expense - Interest expense) + Income tax expense (Net income - Income tax expense - Interest expense) + Interest expense (Net income - Income tax expense - Interest expense) + Net income Data table Luigi Peterson Net income Income tax expense Interest expense 73,250 $ 23,340 76,300 24,950 650 2,700 Print Done

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The following financial information was obtained from the year ended 2024 income statements for Luigi Automotive and Peterson Automotive:
(Click the icon to view the financial information.)
Requirements
Compute the times-interest-earned ratio for each company. Round to two decimals.
1.
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
=
(Net income + Income tax expense + Interest expense) + Income tax expense
(Net income + Income tax expense + Interest expense) + Interest expense
(Net income + Income tax expense + Interest expense) + Net income
(Net income - Income tax expense - Interest expense) + Income tax expense
(Net income - Income tax expense - Interest expense) + Interest expense
(Net income - Income tax expense - Interest expense) + Net income
Data table
Luigi
Peterson
Net income
$
73,250 $
76,300
Income tax expense
Interest expense
23,340
24,950
650
2,700
Print
Done
Transcribed Image Text:The following financial information was obtained from the year ended 2024 income statements for Luigi Automotive and Peterson Automotive: (Click the icon to view the financial information.) Requirements Compute the times-interest-earned ratio for each company. Round to two decimals. 1. 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 = (Net income + Income tax expense + Interest expense) + Income tax expense (Net income + Income tax expense + Interest expense) + Interest expense (Net income + Income tax expense + Interest expense) + Net income (Net income - Income tax expense - Interest expense) + Income tax expense (Net income - Income tax expense - Interest expense) + Interest expense (Net income - Income tax expense - Interest expense) + Net income Data table Luigi Peterson Net income $ 73,250 $ 76,300 Income tax expense Interest expense 23,340 24,950 650 2,700 Print Done
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