The following information was available for the year ended December 31, 2016: Earnings before interest and taxes (operating income) $ 120,000 Interest expense 30,000 Income tax expense 35,000 Net income 55,000 Total assets at year-end 400,000 Total liabilities at year-end 200,000 a. Calculate the debt ratio at December 31, 2016. (Round your answer to 1 decimal place.) b. Calculate the debt/equity ratio at December 31, 2016.(Round your answer to 2 decimal places.) c. Calculate the times interest earned for the year ended December 31, 2016.(Round your answer to 2 decimal places.)
The following information was available for the year ended December 31, 2016: Earnings before interest and taxes (operating income) $ 120,000 Interest expense 30,000 Income tax expense 35,000 Net income 55,000 Total assets at year-end 400,000 Total liabilities at year-end 200,000 a. Calculate the debt ratio at December 31, 2016. (Round your answer to 1 decimal place.) b. Calculate the debt/equity ratio at December 31, 2016.(Round your answer to 2 decimal places.) c. Calculate the times interest earned for the year ended December 31, 2016.(Round your answer to 2 decimal places.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following information was available for the year ended December 31, 2016:
| Earnings before interest and taxes (operating income) | $ | 120,000 | |
| Interest expense | 30,000 | ||
| Income tax expense | 35,000 | ||
| Net income | 55,000 | ||
| Total assets at year-end | 400,000 | ||
| Total liabilities at year-end | 200,000 | ||
a. Calculate the debt ratio at December 31, 2016. (Round your answer to 1 decimal place.)
b. Calculate the debt/equity ratio at December 31, 2016.(Round your answer to 2 decimal places.)
c. Calculate the times interest earned for the year ended December 31, 2016.(Round your answer to 2 decimal places.)
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