Chapter 11, Problem 1BTN

To determine

Times Interest Earned:

The ratio which measures a company’s ability to pay its obligation is called a times interest earned. It is computed by dividing the net income before interest and taxes by the interest expense of the company.

To determine:

1. Compute times interest earned of Apple for the year ended 2013, 2012, and 2011.

2. Determine whether the “Loyalty reward liabilities” is known or estimated”. Explain how this liability is created.

3. Identification of total of accrued expenses and search its footnote to list the six accounts that make up accrued expenses.

4. Compute its times interest earned for years ending after September 28, 2013 and compare the results with part 1.