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    ylujan's Avatar
    ylujan Posts: 10, Reputation: 1
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    #1

    Oct 3, 2010, 11:53 AM
    Accounting and Finance.
    Exercise 9-9 Computing and interpreting times interest earned L.O. A1

    The information for separate companies a through f is given below:

    Net Income (Loss) InterestExpense Income Taxes
    a. $ 190,000 $104,500 47,500
    b. 184,600 53,534 66,456
    c. 193,100 7,724 92,688
    d. 161,500 40,375 67,830
    e. 123,500 25,935 46,930
    f. (53,200) 68,096 0

    --------------------------------------------------------------------------------

    Requirement 1:
    Compute times interest earned. (Round your answers to 2 decimal places.)

    Company Times interest earned
    A
    B
    C
    D
    E
    F

    --------------------------------------------------------------------------------

    I need help figuring out the first company then I can figure out the rest.
    WhAT would be the times interest earned for Company A?
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Oct 3, 2010, 12:12 PM

    Take Income before interest and taxes, then divide this number by the interest.

    Based on the information provided if your net income is after interest and taxes you will have to add interest and taxes to net income to arrive at EBIT (Earnings Before Interest & Taxes), then divide EBIT by the interest expense.
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