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Which company indicates the strongest ability to pay interest expense as it comes due?

Which company indicates the strongest ability to pay interest expense as it comes due?

FINANCIAL ACCOUNTING
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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Which company indicates the strongest ability to pay interest expense as it comes due?

**Exercise 9-19 (Static) Computing and Interpreting Times Interest Earned LO A1** Use the following information from separate companies a through d: | | Net Income (Loss) | Interest Expense | Income Taxes | |--------|-------------------|------------------|--------------| | a. | $119,000 | $44,000 | $35,000 | | b. | 135,000 | 16,000 | 25,000 | | c. | 138,000 | 12,000 | 30,000 | | d. | 314,000 | 14,000 | 50,000 | Compute times interest earned. Which company indicates the strongest ability to pay interest expense as it comes due?
Transcribed Image Text:**Exercise 9-19 (Static) Computing and Interpreting Times Interest Earned LO A1** Use the following information from separate companies a through d: | | Net Income (Loss) | Interest Expense | Income Taxes | |--------|-------------------|------------------|--------------| | a. | $119,000 | $44,000 | $35,000 | | b. | 135,000 | 16,000 | 25,000 | | c. | 138,000 | 12,000 | 30,000 | | d. | 314,000 | 14,000 | 50,000 | Compute times interest earned. Which company indicates the strongest ability to pay interest expense as it comes due?
**Instructions:** Complete this question by entering your answers in the tabs below. **Tabs:** - Times Interest Earned Ratio - Interest Coverage **Instruction:** Compute times interest earned. **Table: Times Interest Earned Ratio** | Company | Choose Numerator: | / | Choose Denominator: | = | Ratio | |---------|--------------------------------|---|-----------------------|---|--------| | | Income before interest & taxes | / | Interest expense | = | | | a | | / | | = | times | | b | | / | | = | times | | c | | / | | = | times | | d | | / | | = | times | - **Columns Explanation:** - **Company:** Identifies the entity for which the ratio is being calculated (a, b, c, d). - **Choose Numerator:** Refers to "Income before interest & taxes." - **Choose Denominator:** Refers to "Interest expense." - **Ratio:** The result of dividing the numerator by the denominator, expressed in times.
Transcribed Image Text:**Instructions:** Complete this question by entering your answers in the tabs below. **Tabs:** - Times Interest Earned Ratio - Interest Coverage **Instruction:** Compute times interest earned. **Table: Times Interest Earned Ratio** | Company | Choose Numerator: | / | Choose Denominator: | = | Ratio | |---------|--------------------------------|---|-----------------------|---|--------| | | Income before interest & taxes | / | Interest expense | = | | | a | | / | | = | times | | b | | / | | = | times | | c | | / | | = | times | | d | | / | | = | times | - **Columns Explanation:** - **Company:** Identifies the entity for which the ratio is being calculated (a, b, c, d). - **Choose Numerator:** Refers to "Income before interest & taxes." - **Choose Denominator:** Refers to "Interest expense." - **Ratio:** The result of dividing the numerator by the denominator, expressed in times.
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