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Times-Interest-Earned Ratio Smith and Sons, Inc. Income Statement (in millions) 2016 2015 Net sales 10,300 9,800 Cost of goods sold (5,500) (5,200) Gross profit 4,800

Times-Interest-Earned Ratio

Smith and Sons, Inc. Income Statement

(in millions)

2016 2015
Net sales 10,300 9,800
Cost of goods sold (5,500) (5,200)
Gross profit 4,800 4,600
Selling and administrative expenses (2,800) (2,700)
Income from operations 2,000 1,900
Interest expense (300) (250)
Income before income taxes 1,700 1,650
Income tax expense (420) (400)
Net income 1,280 1,250

Smith and Sons, Inc.

Balance Sheet

(in millions)

2016 2015
Assets
Current assets
Cash and cash equivalents 450 650
Accounts receivable 900 800
Inventory 750 900
Other current assets 400 250
Total current assets 2,500 2,600
Property, plant & equipment, net 2,350 2,250
Other assets 5,700 5,900
Total Assets 10,550 10,750
Liabilities and Stockholders' Equity
Current liabilities 3,250 3,150
Long-term liabilities 5,000 5,400
Total liabilities 8,250 8,550
Stockholders' equity-common 2,300 2,200
Total Liabilities and Stockholders' Equity 10,550 10,750

Calculate the times-interest-earned ratio for Smith & Sons, Inc., for 2015 and 2016.

Round answers to two decimal places.

2015

2016

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