Times-Interest-Earned ratio: It is the ratio that quantifies a business ability to pay interest expense. It is calculated as shown below: Times-interest- earned ratio } = Income before income tax + Interest expense Interest expense To Calculate : Times-interest-earned ratio for the current year and the preceding year.

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Answer 1

Question

Chapter 14, Problem 14.14EX

a)

To determine

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

Times-interest-earned ratio}=Income before income tax+Interest expenseInterest expense

To Calculate: Times-interest-earned ratio for the current year and the preceding year.

b)

To determine

To Draw: The conclusion of Company’s times-interest-earned ratio

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Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's expenses, Gross margin, and Net income?

Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?

Answer 2

Question

Chapter 14, Problem 14.14EX

a)

To determine

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

Times-interest-earned ratio}=Income before income tax+Interest expenseInterest expense

To Calculate: Times-interest-earned ratio for the current year and the preceding year.

b)

To determine

To Draw: The conclusion of Company’s times-interest-earned ratio

Expert Solution & Answer

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Answer 3

Question

Chapter 14, Problem 14.14EX

a)

To determine

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

Times-interest-earned ratio}=Income before income tax+Interest expenseInterest expense

To Calculate: Times-interest-earned ratio for the current year and the preceding year.

b)

To determine

To Draw: The conclusion of Company’s times-interest-earned ratio

Expert Solution & Answer

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See solution

Answer 4

Question

Chapter 14, Problem 14.14EX

a)

To determine

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

Times-interest-earned ratio}=Income before income tax+Interest expenseInterest expense

To Calculate: Times-interest-earned ratio for the current year and the preceding year.

b)

To determine

To Draw: The conclusion of Company’s times-interest-earned ratio

Expert Solution & Answer

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See solution

Answer 5

Chapter 14, Problem 14.14EX

a)

To determine

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

Times-interest-earned ratio}=Income before income tax+Interest expenseInterest expense

To Calculate: Times-interest-earned ratio for the current year and the preceding year.

b)

To determine

To Draw: The conclusion of Company’s times-interest-earned ratio

Answer 6

Chapter 14, Problem 14.14EX

a)

To determine

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

Times-interest-earned ratio}=Income before income tax+Interest expenseInterest expense

To Calculate: Times-interest-earned ratio for the current year and the preceding year.

Answer 7

Chapter 14, Problem 14.14EX

a)

To determine

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

Times-interest-earned ratio}=Income before income tax+Interest expenseInterest expense

To Calculate: Times-interest-earned ratio for the current year and the preceding year.

Answer 8

b)

To determine

To Draw: The conclusion of Company’s times-interest-earned ratio

Answer 9

b)

To determine

To Draw: The conclusion of Company’s times-interest-earned ratio

Answer 10

Expert Solution & Answer

Answer 11

Expert Solution & Answer

Answer 12

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Answer 13

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