Question
What is the number of times interest charges are earned in 2017? 16.7 times 19.7 times 29.1 times 28.1 times Ignore your answer to the
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What is the number of times interest charges are earned in 2017?
16.7 times
19.7 times
29.1 times
28.1 times
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Ignore your answer to the question above. Assume the times interest earned in 2016 was 3.3 times and in 2017 it was 3.0 times. Which of the following statements is FALSE?
The number of times interest charges are earned ratio has declined from 2016 to 2017.
In 2017, earnings before interest and taxes were approximately three times the amount of the company's interest expense.
The company's number of times interest charges are earned ratio improved from 2016 to 2017.
The higher the number of times interest charges are earned, the better.
ABC Company Partial Balance Sheet December 31, 2017 December 31, 2016 Assets in no particular order): Cash Property, Plant and Equipment Accounts Receivable Inventory Prepaid Rent Long-term Notes Receivable Short-term (temporary) investments 100,000 540,000 120,000 300,000 8,000 150,000 50,000 $120,000 520,000 140,000 260,000 7,500 120,000 60,000 Liabilities in no particular order): Accounts Payable Short-term Notes Payable Wages Payable Long-term Debt Income Tax Payable 120,000 87,700 10,000 300,000 30,000 210,000 10,000 8,500 280,000 25,500 Income Statement For the Year Ended December 31, 2017 $ Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Income from operations Interest expense Income before tax Income tax Net income 1,200,000 700,000 500,000 120,000 60,000 320,000 11,000 309,000 92,700 216,300
What is the number of times interest charges are earned in 2017?
16.7 times | ||
19.7 times | ||
29.1 times | ||
28.1 times |
Ignore your answer to the question above. Assume the times interest earned in 2016 was 3.3 times and in 2017 it was 3.0 times. Which of the following statements is FALSE?
The number of times interest charges are earned ratio has declined from 2016 to 2017. | ||
In 2017, earnings before interest and taxes were approximately three times the amount of the company's interest expense. | ||
The company's number of times interest charges are earned ratio improved from 2016 to 2017. | ||
The higher the number of times interest charges are earned, the better. |
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