Sherwill’s statement of consolidated income is as follows: Net sales 658 other i

Q: Sherwill’s statement of consolidated income is as follows: Net sales 658 other i

a) Computation of Earning before interest and income taxes (Amount in $) Times interest earned = EBIT/Interest expense = $52/$16 = 3.25 times. b) Computation of Fixed Charge coverage (Amount in $) Income before income taxes and extraordinary charges 36 Add: Interest 16 Earning before interest and income taxes (EBIT) 52

ID: 2579842 • Letter: S

Question

Sherwill’s statement of consolidated income is as follows:

Net sales 658 other income 8 =666

Costs and expenses:

Cost of products sold 418 Selling, general, and administrative expenses 196 Interest 16 =630

Income before income taxes and extraordinary charges 36 Income taxes 18 Income before extraordinary charge 18 Extraordinary charge—losses on tornado damage (net) 4 =Net income 14

Note: Depreciation expense totals $200; operating lease payments total $150; and preferred dividends total $50. Assume that one-third of operating lease payments is for interest. Required a. Compute the times interest earned. b. Compute the fixed charge coverage.

Explanation / Answer

a) Computation of Earning before interest and income taxes (Amount in $)

Times interest earned = EBIT/Interest expense = $52/$16 = 3.25 times.

b) Computation of Fixed Charge coverage (Amount in $)

Income before income taxes and extraordinary charges 36 Add: Interest 16 Earning before interest and income taxes (EBIT) 52

Navigate

Sherry rents her vacation home for 6 months and lives in it for 6 months during

Sherwin Williams will receive $19,850 a year for the next 16 years as a result o

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.

Sherwill’s statement of consolidated income is as follows: Net sales 658 other i

Question

Explanation / Answer

Related Questions

Navigate