Times Interest Earned Sprout Company reported the following on the company's income statement in two recent years: Current Year Prior Year Interest expense $467,000 $560,400 Income before income tax expense 6,911,600 7,733,520 a. Determine the times interest earned ratio for the current year and the prior year. Round to one decimal place. chrent Year Prior Year b. Is the times interest earned ratio improving or declining?

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
Section: Chapter Questions
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Times Interest Earned
Sprout Company reported the following on the company's income statement in two recent years:
Current Year
Prior Year
Interest expense
$467,000
$560,400
Income before income tax expense
6,911,600
7,733,520
a. Determine the times interest earned ratio for the current year and the prior year. Round to one decimal place.
cutent Year
Prior Year
b. Is the times interest earned ratio improving or declining?
Transcribed Image Text:Times Interest Earned Sprout Company reported the following on the company's income statement in two recent years: Current Year Prior Year Interest expense $467,000 $560,400 Income before income tax expense 6,911,600 7,733,520 a. Determine the times interest earned ratio for the current year and the prior year. Round to one decimal place. cutent Year Prior Year b. Is the times interest earned ratio improving or declining?
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