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Shown here are condensed income statements for two different companies (both are organized as LLCs and pay no income taxes). Miller Company Sales $ 1,300,000
| Shown here are condensed income statements for two different companies (both are organized as LLCs and pay no income taxes). |
| Miller Company | ||
| Sales | $ | 1,300,000 |
| Variable expenses (80%) | 1,040,000 | |
| Income before interest | 260,000 | |
| Interest expense (fixed) | 68,000 | |
| Net income | $ | 192,000 |
| Weaver Company | ||
| Sales | $ | 1,300,000 |
| Variable expenses (60%) | 780,000 | |
| Income before interest | 520,000 | |
| Interest expense (fixed) | 328,000 | |
| Net income | $ | 192,000 |
| 1. | Compute times interest earned for Miller Company. |
| Numerator: / Denominator = Times interest earned for Miller Company |
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