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A Company's Income Before Interest Expense and Income Taxes Was

Question 149

Essay

A company's income before interest expense and income taxes was $395,000 in 2010 and $427,000 in 2011.Its fixed interest expense was $125,000 for both years.Calculate the company's times interest earned ratio and comment on its level of risk.

Correct Answer:

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2010: $395,000/$125,000 = 3.2
2011: $427...

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