Question
QUESTION 10 Information from Nue Company's financial statements is provided below. 2013 2012 Current liabilities $250 000 $170 000 Non-current liabilities 130 000 340 000
QUESTION 10
Information from Nue Company's financial statements is provided below.
| 2013 | 2012 |
Current liabilities | $250 000 | $170 000 |
Non-current liabilities | 130 000 | 340 000 |
Shareholders' equity | 440 000 | 560 000 |
Net cash flows from operating activities | 70 000 | 61 000 |
Interest and principal payments | 14 000 | 9 000 |
Net sales | 475 000 | 450 000 |
Total comprehensive income | 90 000 | 72 000 |
Interest expense | 7 500 | 13 500 |
Income tax | 18 000 | 12 500 |
Dividends paid to ordinary shareholders | 16 000 | 28 000 |
The times interest earned ratio:
decreased, which indicates that the company has less cash to pay interest on its debt | ||
increased, meaning the company's creditors will be pleased | ||
indicates a decline in the company's ability to pay its liabilities when they come due | ||
indicates that the company cannot meet its current year interest payments out of current year earnings |
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