Operating income P675,000 Interest Expense 75,000 Income before 40% income tax 600,000 Net Income 360,000 Preferred stock dividends 150,000 Net Income available to common shareholders 210,000 Common shares outstanding 90,000 The times interest earned ratio

Operating income P675,000 Interest Expense 75,000 Income before 40% income tax 600,000 Net Income 360,000 Preferred stock dividends 150,000 Net Income available to common shareholders 210,000 Common shares outstanding 90,000 The times interest earned ratio

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 38MCQ

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Question

Operating income P675,000

Interest Expense 75,000

Income before 40% income tax 600,000

Net Income 360,000

Preferred stock dividends 150,000

Net Income available to common shareholders 210,000

Common shares outstanding 90,000

The times interest earned ratio is

Definition Definition Type of stock which is granted priority over dividend distributions as compared to common stockholders. Preferred stocks also do not carry any voting rights. Notably, in a case where a company is going to be liquidated, preferred stockholders have a priority claim on the value of assets of the company as quoted in the balance sheet, as compared to the common stockholders.

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