Answered

Westonci.ca makes finding answers easy, with a community of experts ready to provide you with the information you seek. Join our platform to connect with experts ready to provide precise answers to your questions in various areas. Get precise and detailed answers to your questions from a knowledgeable community of experts on our Q&A platform.

Times interest earned

Averill Products Inc. reported the following on the company’s income statement in 20Y8 and 20Y9:
20Y9 20Y8
Interest expense $440,000 $400,000
Income before income tax expense 5,544,000 4,400,000

a. Determine the times interest earned ratio for 20Y8 and 20Y9. Round to one decimal place.
20Y9 20Y8
Times Interest Earned
fill in the blank 1

fill in the blank 2


b. Is the change in the times interest earned ratio favorable or unfavorable?

Sagot :

The times interest earned ratio for 20Y8 and 20Y9 are 11 and 12.6 respectively.

The change in the times interest earned ratio is favorable.

According to the question,

In 20Y8 and 20Y9, Averill Products Inc. disclosed the following on its income statement:

For 20Y9,

Interest expense= $440,000

Income before income tax expense= $5,544,000

Times interest earned ratio= 5544000/440000 = 12.6

For 20Y8,

Interest expense=$400,000

Income before income tax expense=$4,400,000

Times interest earned ratio= 4400000/400000 =11

As the times interest earned ratio for 20Y9 is greater than that for 20Y8,the change in the times interest earned ratio is favorable.

Learn more about ratio here:

https://brainly.com/question/2328454

#SPJ1

Thank you for your visit. We are dedicated to helping you find the information you need, whenever you need it. Thanks for using our platform. We aim to provide accurate and up-to-date answers to all your queries. Come back soon. Thank you for using Westonci.ca. Come back for more in-depth answers to all your queries.