Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help, 1 and 2 According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment

Please help, 1 and 2

image text in transcribedimage text in transcribed

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 IT Tech Incorporated for the year ended December 31, 2018. 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 $ 107,000 63,500 43,500 36,700 570 6,230 1,500 $ 4,730 2017 $ 130,500 74,300 56,200 38,400 510 17,290 5,700 $ 11,590 Required: 1. Compute the times interest earned ratios for 2018 and 2017 2. Does IT Tech 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 1. Compute the times interest earned ratios for 2018 and 2017. 2. Does IT Tech 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Lawyers And The Proceeds Of CrimeThe Facilitation Of Money Laundering And Its Control

Authors: Katie Benson

1st Edition

1138744867, 9781138744868

More Books

Students also viewed these Accounting questions