Selected Income Statement Data - for the year ending December 31, 2017: Net sales $4,885,340 Cost of goods sold (2,942,353) Selling expenses (884,685) Operating income 1,058,302 Interest expense (55,240) Earnings before income taxes 1,003,062 Income tax expense (401,225) Net income $ 601,837 Selected Statement of Cash Flow Data - for the year ending December 31, 2017: Cash flows from operations $1,456,084 Capital expenditures $745,862 Wilmington Corporation's times interest earned ratio in 2017 was: A. 20.57 B. 19.16 C. 10.89 D. 18.15

Question

Business

Nicolas Pena

13 April, 17:57

Selected Income Statement Data - for the year ending December 31, 2017: Net sales $4,885,340 Cost of goods sold (2,942,353) Selling expenses (884,685) Operating income 1,058,302 Interest expense (55,240) Earnings before income taxes 1,003,062 Income tax expense (401,225) Net income $ 601,837 Selected Statement of Cash Flow Data - for the year ending December 31, 2017: Cash flows from operations $1,456,084 Capital expenditures $745,862 Wilmington Corporation's times interest earned ratio in 2017 was: A. 20.57 B. 19.16 C. 10.89 D. 18.15

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Answers (1)

Know the Answer?

Rosemary Jenkins · Answer 1

Option (b) is correct.

Explanation:

Given that,

Net sales = $4,885,340

Cost of goods sold = (2,942,353)

Selling expenses = (884,685)

Operating income = $1,058,302

Interest expense = $ (55,240)

Earnings before income taxes = $1,003,062

Income tax expense = $ (401,225)

Net income = $ 601,837

EBIT = Net income + Income tax expense + Interest expense

= $1,003,062 + $401,225 + $55,240

= $1,058,302

Times interest earned ratio in 2017:

= EBIT : Interest expense

= $1,058,302 : $55,240

= 19.1582 or 19.16