E13-5 (Algo) Computing a commonly Used Solvency Ratio [LO 13-4, LO 13-5] According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2018. Let's see whether these changes are reflected in the income statement of Challenger.com for the year ended December 31, 2018. 2018 $ 111,000 65,500 45,500 2017 $ 136,500 75,900 60,600 39,200 530 20,870 Sales Revenue Cost of Goods Sold Gross Profit Selling, General, and Administrative Expenses Interest Expense Income before Income Tax Expense Income Tax Expense Net Income 37,109 610 7,790 2,000 $ 5,790 6,100 $ 14,770 Required: 1. Compute the times interest earned ratios for 2018 and 2017. 2. Does Challenger generate sufficient net income in both years (before taxes and interest) to cover the cost of debt financing? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the times interest earned ratios for 2018 and 2017. (Round your answers to 1 decimal place.) Year Times Interest Earned 2017 2018 According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2018. Let's see whether these changes are reflected in the income statement of Challenger.com for the year ended December 31, 2018. 2017 $ 136,500 75,900 60,600 Sales Revenue Cost of Goods Sold Gross Profit Selling, General, and Administrative Expenses Interest Expense Income before Income Tax Expense Income Tax Expense Net Income 2018 $ 111,000 65,500 45,500 37,100 610 7,790 2,000 $ 5,790 39,200 530 20,870 6,100 $ 14,770 Required: 1. Compute the times interest earned ratios for 2018 and 2017 2. Does Challenger generate sufficient net income in both years (before taxes and interest) to cover the cost of debt financing? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Does Challenger generate sufficient net income in both years before taxes and interest) to cover the cost of debt financing? OYes ONO