Interest Coverage Ratio

E 3. Compute the interest coverage ratios for 2010 and 2011 from the partial income statements of Chimney Corporation that appear below. State whether the ratio improved or worsened over time.

2011 2010

Income from operations $23,890 $18,460

Interest expense 5,800 3,300

Income before income taxes $18,090 $15,160

Income taxes 5,400 4,500

Net income $12,690 $10,660