   Chapter 14, Problem 14.15EX

Chapter
Section
Textbook Problem

Times interest earnedLoomis, Inc. reported the following on the company's income .statement in two recent years:   Current Year Prior Year Interest expense $,13,500,000$16,000,000 Income before income tax expense 310,500,000 432,000,000 a. Determine the times interest earned ratio for the current year and the prior year. Round to one decimal place.b. Is this ratio improving or declining?

(a)

To determine

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

Times-interest-earned ratio}=Incomebeforeincometax+Interest expenseInterest expense

To calculate: Times-interest-earned ratio for the current year and the prior year.

Explanation

Calculate interest earned ratio for current year, if income before income tax is given as $310,500,000, and interest expense is given as$13,500,000.

Times-interest- earned ratio}=Incomebeforeincometax+Interest expenseInterest expense=$310,500,000+$13,500,000$13,500,000=24.0 Calculate interest earned ratio for prior year, if income before income tax is given as$432,000,000, and interest expense is given as \$16,000,000

(b)

To determine

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

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

What is an XBRL taxonomy?

Accounting Information Systems

Define the term marketing

MKTG 12:STUDENT ED.-TEXT

RETURN ON EQUITY AND QUICK RATIO Lloyd Inc. has sales of 200,000, a net income of 15,000, and the following bal...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List) 