Answer:
Times Interest earned:
2013 16.47
2012 49.02
2.- Yes it is suffficient as it is earnings above 10 times their interest
Explanation:
December 31, 2013.2013 2012 Sales Revenue $ 118,000 $ 147,000 Cost of Goods Sold 69,000 78,700 Gross Profit 49,000 $ 68,300 Selling, General, and Administrative Expenses 37,800 40,600 Interest Expense 680 565 Income before Income Tax Expense 10,520 27,135 Income Tax Expense 2,500 6,800 Net Income $ 8,020 $ 20,335
year 2013
Income before taxes: 10,520 + interest expense 680 =
interest before interest and taxes = 11,200
times interest earnings:
11,200/680 = 16.47
year 2012
Income before taxes: 27,135 + interest expense 565 =
interest before interest and taxes = 27,700
times interest earnings:
27,700/565 = 49.02
