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joja [24]
3 years ago
12

A company's interest expense is $15,000. Its income before interest expense and income taxes is $86,250. Its net income is $31,9

00. The company's times interest earned ratio equals:_______
a. 0.47.
b. 5.75.
c. 0.37.
d. 0.17.
e. 2.70.
Business
2 answers:
Ad libitum [116K]3 years ago
7 0

Answer:

b. 5.75.

Explanation:

The times interest earned is the number of times the net income or earnings before interest and taxes can be used to settle the interest expense of an entity.

It is given as the ratio of the earnings before interest and taxes to the interest accrued.

Given that

Interest expense = $15,000

Income before interest expense and income taxes = $86,250

The company's times interest earned ratio

= $86,250/$15,000

= 5.75

It means that the company's earnings before interest and taxes can settle the interest expense 5.75 times.

den301095 [7]3 years ago
5 0

Answer:

b. 5.75

Explanation:

Times Interest earned ratio is the measure of ability of a company to pay the interest on its debts. It is the ratio of earning before interest and tax and interest expense as below.

Times Interest Earned Ratio = Earning before interest and tax / Interest Expense

Times Interest Earned Ratio = $86,250 / $15,000

Times Interest Earned Ratio = 5.75 times

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Answer:

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8 0
3 years ago
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Alla [95]

Answer:

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Explanation:

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4 0
3 years ago
Read 2 more answers
Steve is in charge of accounting for the purchase of equipment at Cal Works, Inc. The company has a policy that all expenditures
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Answer: Materiality

                   

Explanation: In simple words, materiality refers to the accounting concept which states that only those transaction should be recorded in the financial statements which are important to the stakeholders.

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5 0
3 years ago
Can you breifly explain why stockholders' investment and revenues increase stockholders' equity, while dividends and expenses de
Scilla [17]
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3 years ago
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Answer:

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