Lost Pigeon Aviation Income Statement For the Year Ended on December 31 Millions of dollars Net Sales $1,050 Variable costs 420 Fixed costs 368 Total Operating Costs $788 Operating Income (or EBIT) $262 Less interest 60 $202 Earnings before Taxes (EBT) Less taxes (40%) 81 Net Income $121 Times Interest Earned (TIE) Ch 14: Assignment: - Capital Structure Management in Pra Hungry wnaie Liectronics company Income Statement For the Year Ended on December 31 Millions of dollars Net Sales $850 Variable costs 213 Fixed costs 383 Total Operating Costs $596 M Operating Income (or EBIT) $254 Less interest 60 $194 Earnings before Taxes (EBT) Less taxes (40%) 78 Net Income $116 Times Interest Earned (TIE) Complete the following statement, based on the calculations you Ch 14: Assignment: - Capital Structure Management in Practice Complete the following statement, based on the calculations you have already made. Describe the relationship between the TIE ratios of the two companies. Lost Pigeon Aviation has a greater TIE ratio than Hungry Whale Electronics Company, Hungry Whale Electronics Company has a greater the ratio than Lost Pigeon Aviation The companies have equal TIE ratios. Which company is in better position to cover its interest payments, and therefore exhibits lower risk, than the other? Lost Pigeon Aviation is in a better position to cover its interest payment Both companies are equally positioned to cover their interest payments. O Hungry Whale Electronics Company is in a better position to cover its interest payment GNO