Chapter 11, Problem 11.1FSC

1.

To determine

Current liabilities: Liabilities are debt and obligations of a business. Current liability is the obligation, which the company is responsible to pay the outsiders within a year.

Times-Interest-Earned ratio: It is the ratio that quantify a business ability to pay interest expense. It is calculated as shown below:

$\begin{array}{l}\text{Times-interest-}\\ \text{earned ratio}\end{array}\}=\frac{\text{Net income}+\text{Income tax expense}+\text{Interest expense}}{\text{Interest expense}}$

To prepare: The breakdown of Corporation T’s current liabilities at January 30, 2016.

2.

To determine

To calculate: Times-interest-earned ratio for Corporation T for the year ending January 30, 2016.