Given below are comparative balance sheets and an income statement for Namekagon

Question

Given below are comparative balance sheets and an income statement for Namekagon Corporation. Namekagon Corporation Balance Sheets -

2018 Dec. 31 Jan. 1

Cash $ 15,500 $ 15,500

Accounts receivable 46,720 37,500

Inventory 32,400 36,300

Equipment (net) 57,100 66,200

$ 151,720 $ 155,500

Accounts payable 25,900 28,500

Dividends payable 7,700 3,800

Long-term note payable 14,200 14,200

Capital stock, $5 par 72,700 72,700

Retained earnings 31,220 36,300

$ 151,720 $ 155,500

Namekagon Corporation Income Statement For the year ended 2018

Sales $ 228,700

Cost of goods sold (137,530 )

Gross profit on sales $ 91,170

Operating expenses (75,858 )

Operating income $ 15,312

Interest expense (9,000 )

Net income $ 6,312

Namekagon Corporation's interest coverage ratio for 2018 is:

1.43.

1.70.

2.43.

4.95.

Explanation / Answer

1.70. Dear Student Thank you for using Chegg Please find below the answer Statementshowing Computations Paticulars Amount Times interest earned or interest coverage ratio = EBIT/Int Net Income                   6,312.00 Add Interest                   9,000.00 EBIT                 15,312.00 interest coverage ratio = 15,312/9000                            1.70

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