Times-Interest-Earned Ratio

Calculate the times-interest-earned ratio for Los Altos, Inc., for both years, using the financial statements displayed below. Round to nearest hundredth.

	2020	2019
Times-interest-earned ratio

Did the companys ability to pay its current interest charges improve over the two years? Yes or No?

Los Altos, Inc.Income StatementFor Years Ended December 31, 2020 and 2019(in millions)	2020	2019
Net sales	$10,000	$9,500
Cost of goods sold	5,500	5,200
Gross profit	4,500	4,300
Selling and administrative expenses	2,800	2,700
Income from operations	1,700	1,600
Interest expense	300	250
Income before income taxes	1,400	1,350
Income tax expense	420	400
Net income	$980	$950

Los Altos, Inc.Balance SheetDecember 31, 2020 and 2019(in millions)	2020	2019
Assets
Current assets
Cash and cash equivalents	$200	$400
Accounts receivable	900	800
Inventory	500	650
Other current assets	400	250
Total current assets	2,000	2,100
Property, plant, & equipment (net)	2,600	2,500
Other assets	2,700	2,900
Total assets	$10,300	$10,500
Liabilities and Stockholders' Equity
Current liabilities	$3,000	$2,900
Long-term liabilities	5,000	5,400
Total liabilities	8,000	8,300
Stockholders' equity - common	2,300	2,200
Total Liabilities and Stockholders' Equity	$10,300	$10,500