Corporate Financial Accounting
14th Edition
ISBN: 9781305653535
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 11, Problem 11.3ADM
Aeropostale: Times interest earned
Aeropostale, Inc. is a specialty fashion retailer targeting young adults. The income before income tax expense and interest expense for four recent years follow (in millions):
| Year 4 | Year 3 | Year 2 | Year 1 | |
| Income (loss) before income tax expense | $(132.1) | $(135.6) | $91.7 | $129.1 |
| Interest expense | 8.8 | 0.9 | 0.5 | 0.4 |
A. Compute the time interest earned ratio for each year. (Round to one decimal place.)
B. Plot the four points on a graph with the year numbers on the horizontal axis, beginning with Year 1.
C. Interpret the trend in the ratio from your graph.
D. What happened to interest expense in Year 4? What might be the cause?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Subject: accounting
What is the due date of a 220-day loan made on Feb. 12?
Group of answer choices
Sep 20
Sep 21
Aug 20
July 30
A company reported the following information for its most recent fiscal year:
Net Income: $522
Interest Expense: $810
Income Tax Expense: $64
Depreciation and Amortization Expense: $80
What is the company's interest coverage (aka times interest earned) ration for its most recent fiscal year?
Provide your answer to the nearest whole dollar (no decimals).
< Previous
MacBook Air
Not s
Chapter 11 Solutions
Corporate Financial Accounting
Ch. 11 - Describe the two distinct obligations incurred by...Ch. 11 - Explain the meaning of each of the following terms...Ch. 11 - If you asked your broker to purchase for you a 12%...Ch. 11 - A corporation issues 26,000,000 of 9% bonds to...Ch. 11 - If bonds issued by a corporation are sold at a...Ch. 11 - Prob. 6DQCh. 11 - Bonds Payable has a balance of 5,000,000 and...Ch. 11 - Prob. 8DQCh. 11 - Prob. 9DQCh. 11 - Issuing bonds at face amount On January 1, the...
Ch. 11 - Issuing bonds at a discount On the first day of...Ch. 11 - Prob. 11.3BECh. 11 - Prob. 11.4BECh. 11 - Prob. 11.5BECh. 11 - Redemption of bonds payable A 500,000 bond issue...Ch. 11 - Prob. 11.1EXCh. 11 - Entries for issuing bonds Thomson Co. produces and...Ch. 11 - Prob. 11.3EXCh. 11 - Prob. 11.4EXCh. 11 - Entries for issuing and calling bonds; loss Hoover...Ch. 11 - Entries for issuing and calling bonds; gain Mia...Ch. 11 - Prob. 11.7EXCh. 11 - Present value of amounts due Assume that you are...Ch. 11 - Prob. 11.9EXCh. 11 - Present value of an annuity On January 1 you win...Ch. 11 - Prob. 11.11EXCh. 11 - Prob. 11.12EXCh. 11 - Present value of bonds payable; premium Moss Co....Ch. 11 - Amortize discount by interest method On the first...Ch. 11 - Amortize premium by interest method Shunda...Ch. 11 - Prob. 11.16EXCh. 11 - Prob. 11.17EXCh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 11.2APRCh. 11 - Entries for bonds payable, including bond...Ch. 11 - Prob. 11.4APRCh. 11 - Prob. 11.5APRCh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 11.2BPRCh. 11 - Prob. 11.3BPRCh. 11 - Bond discount, entries for bonds payable...Ch. 11 - Prob. 11.5BPRCh. 11 - Continuing Company AnalysisAmazon: Times interest...Ch. 11 - Arch Coal:Times interest earned Arch Coal, Inc. is...Ch. 11 - Aeropostale: Times interest earned Aeropostale,...Ch. 11 - Prob. 11.4ADMCh. 11 - Ethics in Action CLG Capital Inc. is a large...Ch. 11 - Prob. 11.3TIF
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Suppose you want to estimate your transportation expenses for the year.Explain how you could use this one-month statement to make an estimate for one year of transportation expenses.arrow_forwardAnswer with in 30 Minutes to get upvotes?arrow_forwardComplete a,b,c,d,& e please and thank youarrow_forward
- Computing times-interest-earned ratio The income statement for Vermont Communications follows. Assume Vermont Communications signed a 3-month, 3%, $6,000 note on June 1, 2018, and that this was the only note payable for the company. Requirements Fill in the missing information for Vermont’s year ended July 31, 2018, income statement. Round to the nearest dollar. Compute the times-interest-earned ratio for the company. Round to two decimals.arrow_forwardSubject: accountingarrow_forwardplease answer the attached.arrow_forward
- $2000 is deposited on March 1 and $1000 on April 1 in a bank that pays 4% interest. What is the total amount in the bank on June 1? What is the interest earned? use monthsarrow_forwardQuiz: Accounting for Current Liabi... G Saved Help Save & Exit Submit Check my work Required information Cost of warranty program is probable 30s 0:00 / 2:06 XL 目 Knowledge Check 01 Maas, Incorporated, sells washers and dryers that include a maximum one-year warranty covering parts. Past experience shows that warranty expense averages about 2 percent of the selling price of each washer and dryer. Net sales totaled $400,000 during the year ending December 31. Prepare the December 31 adjusting entry for Maas by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns. View transaction list Journal entry worksheet II F3 F4 F5 F7 F8 F10 F12 Finder LL DeX 114 & 3arrow_forwardFlush Mate Co. wholesales bathroom fixtures. During the current fiscal year, Flush Mate Co. received the following notes: Date Face Amount Interest Rate Term 45 days 60 days 120 days 90 days 60 days Mar. 6 $80,000 1. 5% Apr. 23 July 20 Sept. 6 2. 24,000 42,000 3. 54,000 4. 5. Nov. 29 27,000 72,000 30 days 6. Dec. 30 Instructions 1. Determine for each note (a) the due date and (b) the amount of interest due at maturity, identifying each note by number. 2. Journalize the entry to record the dishonor of Note (3) on its due date. 3. Journalize the adjusting entry to record the accrued interest on Notes (5) and (6) on December 31. 4. Journalize the entries to record the receipt of the amounts due on Notes (5) and (6) in January.arrow_forward
- Computing times-interest-earned ratio The income statement for California Communications follows. Assume California Communications signed a 3-month, 9%, $3,000 note on June 1, 2018, and that this was the only note payable for the company. Requirements Fill in the missing information for California’s year ended July 31, 2018, income statement. Round to the nearest dollar. Compute the times-interest-earned ratio for the company. Round to two decimals.arrow_forward1arrow_forwardUsing the tables found in the textbook, determine the difference between the monthly payments on a $120,000 home at 6½% and at 8% for 25 years. A. $91.12 B. $151.02 C. $81.12 D. $115.20arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License