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Required information [The following information applies to the questions displayed below.] Shown here are condensed income statements for two different companies (assume no income taxes).
Required information [The following information applies to the questions displayed below.] Shown here are condensed income statements for two different companies (assume no income taxes). Sales Miller Company $ 1,000,000 800,000 Variable expenses (80%) Income before interest Interest expense (fixed) Net income 200,000 60,000 $ 140,000 Weaver Company Sales $ 1,000,000 Variable expenses (60%) 600,000 Income before interest 400,000 Interest expense (fixed) 260,000 Net income $ 140,000 13 Required: 1. Compute times interest earned for Miller Company and for Weaver Company. Required: 1. Compute times interest earned for Miller Company and for Weaver Company. Times Interest Earned for Miller Company and for Weaver Company. Choose Numerator: 1 Choose Denominator: Times interest earned Times interest earned 1 L 0 0 [The following information applies to the questions displayed below.] Shown here are condensed income statements for two different companies (assume no income taxes). Miller Company $ 1,000,000 800,000 Sales Variable expenses (80%) Income before interest Interest expense (fixed) Net income 200,000 60,000 $ 140,000 Weaver Company $ 1,000,000 600,000 Sales Variable expenses (60%) Income before interest Interest expense (fixed) Net income 400,000 260,000 $ 140,000 2. What happens to each company's net income if sales increase by 30% ? Note: Round your answers to nearest whole percent. Company Miller Company Weaver Company Net income % % 3. What happens to each company's net income if sales increase by 50%? Note: Round your answers to nearest whole percent. Company Miller Company Weaver Company Net Income % % 4. What happens to each company's net income if sales decrease by 10%? Note: Round your answers to nearest whole percent. Company Net Income Miller Company Weaver Company Decreases by Decreases by 14 % 29 % 5. What happens to each company's net income if sales decrease by 40%? Note: Round your answers to nearest whole percent. Company Miller Company Weaver Company Net Income % % Required information [The following information applies to the questions displayed below.] Shown here are condensed income statements for two different companies (assume no income taxes). Miller Company $ 1,000,000 800,000 Sales Variable expenses (80%) Interest expense (fixed) Income before interest Net income 200,000 60,000 $ 140,000 Weaver Company $ 1,000,000 600,000 Sales Variable expenses (60%) Income before interest Interest expense (fixed) Net income 400,000 260,000 $ 140,000 6. Which company would have a greater ability to pay interest expense if sales were to decrease? O Miller Company O Weaver Company
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