Chapter 11, Problem 11.2ADM

Arch Coal:Times interest earned

Arch Coal, Inc. is a major coal mining company in the United States. Condensed income statement information for three recent years follows (in millions):

	Year 3	Year 2	Year 1
Revenues	$2,937	$ 3,014	$ 3,768
Costs and expenses	3,087	3,677	4,52$
Loss from operations	$ (150)	$ (663)	$ (757)
Interest expense (net)	383	375	312
Loss before income taxes	$ (533)	$(1,038)	$(1,069)

A. Compute the times interest earned ratio for the three years. (Round to one decimal place.)

B. How would you interpret a negative ratio?

C. Is the trend improving or deteriorating?