Question
The following financial data is provided for Jacquie Company: JACQUIE COMPANY Balance Sheet As of 31 December Cash $ 90,000 Current liabilities $142,500 Accounts receivable
The following financial data is provided for Jacquie Company:
| JACQUIE COMPANY Balance Sheet As of 31 December |
| Cash | $ 90,000 |
| Current liabilities | $142,500 |
| Accounts receivable | 70,000 |
| Bonds payable | 145,000 |
| Inventory | 140,000 |
| Common stock | 125,000 |
| Plant assets (net) | 200,000 |
| Retained earnings | 87,500 |
| Total assets | $500,000 |
| Total liabilities and shareholders' equity | $500,000 |
Sales revenue for the year was $1,400,000, gross profit was $320,000, and net income was $85,000. One year ago, accounts receivable was $76,000, inventory was $110,000, total assets was $460,000, and shareholders equity was $170,000. If the company's interest expense was $12,000 and its income tax expense $10,000, what was the company's interest coverage ratio for the year?
| A. | 4.62 | |
| B. | 8.08 | |
| C. | 8.92 | |
| D. | 7.08 |
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