Abercrombie & Fitch (ANF) is a leading, global specialty retailer of casual apparel. The income before income tax expense and interest expense for four recent years follow (in thousands):

a. Compute the times interest earned ratio for each year.
b. Plot the four points on a graph with the year numbers on the horizontal axis, beginning with Year 1.
c. Interpret the trend in the ratio from your graph.
d. What happened to the times interest earned ratio in Year 2? What might be the cause?

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Income (loss) before income tax expense Interest expense Year 4 $116,367 10,999 Year 3 Year 2 $55,161 $(3,478) 16,889 18,666 Year 1 $54,590 18,248