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 prior year.

Question

How do I calculate based on the Income Statement and Balance sheet below: Times Interest Earned =Earnings before interest & taxes/interest expense, gross? (in thousands) (in thousands) 2015 2014 Sales (net) 30,500 Cash 400 500 Interest income 500 Short-term investments 300 200 Total Revenue 31,000 Accounts receivable (net) 3,200 2,900 Cost and expenses Inventory 6,000 5,400 Cost of goods sold 17,600 Total current assets 9,900 9,000 Selling and general administrative expenses 3,550 Property, plant, and equipment 7,100 7,000 Depreciation and amortization expenses 1,890 Total assets 17,000 16,000 Interest Expense 900 Accounts payable 3,700 3,400 Total costs and expenses 23,940 Income taxes payable 900 800 Income before taxes 7,060 Accrued expenses 1,700 1,400 Income taxes -2,800 Total current liabilities 6,300 5,600 Net income 4,260 Long-term debt 2,000 1,800 Total liabilities 8,300 7,400 Common…

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Chapter 12, Problem 12.15EX

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 prior year.

b)

To determine

To Compare: Times-interest-earned ratio of the current year from the prior year

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How do I calculate based on the Income Statement and Balance sheet below: Times Interest Earned =Earnings before interest & taxes/interest expense, gross? (in thousands) (in thousands) 2015 2014 Sales (net) 30,500 Cash 400 500 Interest income 500 Short-term investments 300 200 Total Revenue 31,000 Accounts receivable (net) 3,200 2,900 Cost and expenses Inventory 6,000 5,400 Cost of goods sold 17,600 Total current assets 9,900 9,000 Selling and general administrative expenses 3,550 Property, plant, and equipment 7,100 7,000 Depreciation and amortization expenses 1,890 Total assets 17,000 16,000 Interest Expense 900 Accounts payable 3,700 3,400 Total costs and expenses 23,940 Income taxes payable 900 800 Income before taxes 7,060 Accrued expenses 1,700 1,400 Income taxes -2,800 Total current liabilities 6,300 5,600 Net income 4,260 Long-term debt 2,000 1,800 Total liabilities 8,300 7,400 Common…

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