Question
6. Daffodil Co.s EBIT was $200,000 in Year 1 and $150,000 in Year 2. Interest Expense was reported $40,000 in Year 1 and $25,000 in
6. Daffodil Co.s EBIT was $200,000 in Year 1 and $150,000 in Year 2. Interest Expense was reported $40,000 in Year 1 and $25,000 in Year 2. Which of the following statements about Daffodils Times-Interest-Earned Ratio is TRUE?
The times-interest-earned ratio in Year 2 is lower than in Year 1.
The company could not afford interest expense payments in Years 1 and 2.
The risk that Daffodil Co. will not be able to pay interest expense in Year 2 is lower than in Year 1.
Daffodil Co.s ability to pay-off the interest reduced in Year 2.
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Taxation Of Individuals And Business Entities 2015
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver
6th Edition
978-1259206955, 1259206955, 77862368, 978-0077862367
