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iVinArrow [24]
3 years ago
6

The records of Pippins, Inc., included the following information: Net sales $ 1,000,000 Gross margin 475,000 Interest expense 50

,000 Income tax expense 80,000 Net income 240,000 Compute the times interest earned ratio, rounded to the nearest decimal. 4.8 6.4 7.4 20.0
Business
1 answer:
Lelu [443]3 years ago
6 0

Answer:

Times interest earned (TIE) = 7.4 times

Explanation:

The times interest earned (TIE) ratio is a measure used to analyze the company's ability to meet its debt obligations on the basis of its current income level. The TIE ratio is calculated as follows,

Times Interest Earned (TIE)  =  EBIT / Total Interest expense

Where,

  • EBIT is the earnings of the company before interest and tax

To calculate TIE, we first need to determine the EBIT. EBIT can be calculated by backward working. Thus, EBIT is:

EBIT = Net income + tax + interest expense

EBIT = 240000 + 80000 + 50000

EBIT = $370000

Times interest earned (TIE) = 370000 / 50000

Times interest earned (TIE) = 7.4 times

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Answer:

d. Overstate, understate, understate, zero

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The amount of earnings overall is the same. so, in the end, there is n difference in retained earnings.

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At 2016 the sales revenue should be the present value of 1,000 dollars not the complete 1,000 dollars. Thus, is overstated.

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In this scenario ABC has decided to pay 10% stock dividend. This will be paid to ordinary share holders.

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Explain the difference between socialism and a pure command economy
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Command economies have public enterprises where the government controls everything including business and production. In socialism, the means of production, distribution, and exchange are owned or regulated by the community as a whole. 
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