For the most recent year, Camargo, Inc., had sales of $546,000, cost of goods sold of $244,410, depreciation expense of $61,900, and additions to retained earnings of $74,300. The firm currently has 21,500 shares of common stock outstanding and the previous year's dividends per share were $1.25.

Assuming a 23 % income tax rate, what was the times interest earned ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

Question

Business

Sammy Whitehead

30 April, 23:24

For the most recent year, Camargo, Inc., had sales of $546,000, cost of goods sold of $244,410, depreciation expense of $61,900, and additions to retained earnings of $74,300. The firm currently has 21,500 shares of common stock outstanding and the previous year's dividends per share were $1.25.

Assuming a 23 % income tax rate, what was the times interest earned ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e. g., 32.16.)

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Answers (1)

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Felipe · Answer 1

As we know that time interest earned ratio = Income before interest and taxes / interest expense.

Sales = 546000

less: cost of goods sold = (244410)

Gross profit 301590

Less: expenses

Depreciation expense = (61900)

Profit before interest and taxes 239690

Less: tax

(239690 * 23%) = (55128)

Profit 184562

Profit - Retained earning Addition = Interest

184562 - 74300 = 110262.

Interest earned ratio = 239690 / 110262 = 2.17 times