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Business Accounting Financial Accounting: Information for Decisions

1. Concept Introduction: Times interest earned ratio is a solvency ratio. It is calculated to know the finance cost repayment capacity of the business. Times interest earned ratio is calculated by dividing the profits before income and taxes by interest. To calculate: the times interest earned ratio for the most two years. The times interest earned ratios for the most two years are as follows: Current year Prior year Times interest earned ratio 4.82 5.95 The times interest earned ratios for the most two years are calculated as follows: Figures in million won Current year Prior year Net income (A) 2,33,94,358 3,04,74,764 Income taxes (B) 44,80,676 78,89,515 Interest expense (C) 72,94,002 77,54,972 Profits before interest and taxes (D) = (A+B+C) 3,51,69,036 4,61,19,251 Times interest earned ratio = (D/C) 4.82 5.95 2. Concept Introduction: Times interest earned ratio is a solvency ratio. It is calculated to know the finance cost repayment capacity of the business. Times interest earned ratio is calculated by dividing the profits before income and taxes by interest. To identify: the company that provides the best coverage of interest expense. Company A provides the best coverage of interest expense. Interest coverage ratios of companies are compared as follows: Current year Prior year Average Company S 4.82 5.95 5.38 Company A 140.28 369.79 255.04 Company G 176.99 192.01 184.50 Company A has the highest Interest coverage ratio; hence company A provides the best coverage of interest expense.

1. Concept Introduction: Times interest earned ratio is a solvency ratio. It is calculated to know the finance cost repayment capacity of the business. Times interest earned ratio is calculated by dividing the profits before income and taxes by interest. To calculate: the times interest earned ratio for the most two years. The times interest earned ratios for the most two years are as follows: Current year Prior year Times interest earned ratio 4.82 5.95 The times interest earned ratios for the most two years are calculated as follows: Figures in million won Current year Prior year Net income (A) 2,33,94,358 3,04,74,764 Income taxes (B) 44,80,676 78,89,515 Interest expense (C) 72,94,002 77,54,972 Profits before interest and taxes (D) = (A+B+C) 3,51,69,036 4,61,19,251 Times interest earned ratio = (D/C) 4.82 5.95 2. Concept Introduction: Times interest earned ratio is a solvency ratio. It is calculated to know the finance cost repayment capacity of the business. Times interest earned ratio is calculated by dividing the profits before income and taxes by interest. To identify: the company that provides the best coverage of interest expense. Company A provides the best coverage of interest expense. Interest coverage ratios of companies are compared as follows: Current year Prior year Average Company S 4.82 5.95 5.38 Company A 140.28 369.79 255.04 Company G 176.99 192.01 184.50 Company A has the highest Interest coverage ratio; hence company A provides the best coverage of interest expense.

Financial Accounting: Information for Decisions

Financial Accounting: Information for Decisions

8th Edition

ISBN: 9781259533006

Author: John J Wild

Publisher: McGraw-Hill Education

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Chapter 9 Solutions

Financial Accounting: Information for Decisions

Ch. 9 - Prob. 1DQ Ch. 9 - Prob. 2DQ Ch. 9 - Prob. 3DQ Ch. 9 - Prob. 4DQ Ch. 9 - What is the combined amount (in percent) of the...Ch. 9 - What is the current Medicare tax rate? This rate...Ch. 9 - Prob. 7DQ Ch. 9 - Prob. 8DQ Ch. 9 - Prob. 9DQ Ch. 9 - Why are warranty liabilities usually recognized on...

Ch. 9 - Prob. 11DQ Ch. 9 - Prob. 12DQ Ch. 9 - Prob. 13DQ Ch. 9 - Prob. 14DQ Ch. 9 - Prob. 15DQ Ch. 9 - Prob. 16DQ Ch. 9 - Prob. 17DQ Ch. 9 - Prob. 1QS Ch. 9 - Prob. 2QS Ch. 9 - Ticketsales, Inc., receives $5,000,000 cash in...Ch. 9 - Prob. 4QS Ch. 9 - Prob. 5QS Ch. 9 - Prob. 6QS Ch. 9 - Prob. 7QS Ch. 9 - Prob. 8QS Ch. 9 - Prob. 9QS Ch. 9 - Prob. 10QS Ch. 9 - Prob. 11QS Ch. 9 - Prob. 12QS Ch. 9 - Sera Corporation has made and recorded its...Ch. 9 - Prob. 1E Ch. 9 - Prob. 2E Ch. 9 - Prob. 3E Ch. 9 - Interest-bearing notes payable with year-end...Ch. 9 - Prob. 5E Ch. 9 - Prob. 6E Ch. 9 - Prob. 7E Ch. 9 - Prob. 8E Ch. 9 - Prob. 9E Ch. 9 - Hitzu Co. sold a copier costing $4,800 with a...Ch. 9 - Prob. 11E Ch. 9 - Prob. 12E Ch. 9 - Accounting for contingent liabilities C3 Prepare...Ch. 9 - Prob. 14E Ch. 9 - Prob. 15E Ch. 9 - Prob. 16E Ch. 9 - Prob. 18E Ch. 9 - Prob. 1PSA Ch. 9 - Prob. 2PSA Ch. 9 - Prob. 3PSA Ch. 9 - Prob. 4PSA Ch. 9 - Prob. 5PSA Ch. 9 - Entries for payroll transactions P2 P3 P5...Ch. 9 - Prob. 1PSB Ch. 9 - Prob. 2PSB Ch. 9 - Fishing Guides Co. has four employees. FICA Social...Ch. 9 - Prob. 4PSB Ch. 9 - Shown here are condensed income statements for two...Ch. 9 - Prob. 6PSB Ch. 9 - Prob. 9SP Ch. 9 - Refer to the financial statements of Apple in...Ch. 9 - Key figures for Apple and Google follow. *Apple...Ch. 9 - Prob. 3BTN Ch. 9 - Prob. 5BTN Ch. 9 - Assume that your team is in business and you must...Ch. 9 - Prob. 7BTN Ch. 9 - Prob. 8BTN Ch. 9 - Prob. 9BTN

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