Use the following information from separate companies a through d.Net Income(Loss)$ 103,00097,60087,550106,100a.b.C.d.InterestExpense$ 58,71015,61621,8884,244Income Taxes$ 25,75035, 13636,77150,928Compute times interest earned. Which company indicates the strongest ability to pay interest expense as it comes due?

This ratio measures an entity's ability to make interest payments on its debts when they come…

Use the following information from separate companies a through d a. b. Net Income (Loss) $ 103,000 97,600 87,550 106,100 Income Taxes $ 25,750 35, 136 36,771 50,928 Compute times interest earned. Which company indicates the strongest ability to pay interest expense as it comes due? C. d. Interest Expense $ 58,710 15,616 21,888 4,244

Use the following information from separate companies a through d a. b. Net Income (Loss) $ 103,000 97,600 87,550 106,100 Income Taxes $ 25,750 35, 136 36,771 50,928 Compute times interest earned. Which company indicates the strongest ability to pay interest expense as it comes due? C. d. Interest Expense $ 58,710 15,616 21,888 4,244

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

Use the following information from separate companies a through d.
Net Income
(Loss)
$ 103,000
97,600
87,550
106,100
a.
b.
C.
d.
Interest
Expense
$ 58,710
15,616
21,888
4,244
Income Taxes
$ 25,750
35, 136
36,771
50,928
Compute times interest earned. Which company indicates the strongest ability to pay interest expense as it comes due?

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Step 1: Times interest earned or Interest coverage ratio:

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Step 2: Calculation of times interest earned for company a :

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Step 3: Calculation of times interest earned for company b:

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Step 4: Calculation of times interest earned for company c :

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Step 5: Calculation of times interest earned for company d :

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Step 6: Which company has the strongest ability to pay interest expense:

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