Question

Shown here are condensed income statements for two different companies ( both are organized as LLCs and pay no income taxes).

.:.
Required
1. Compute times interest earned for Ellis Company.
2. Compute times interest earned for Seidel Company.
3. What happens to each company’s net income if sales increase by 10%?
4. What happens to each company’s net income if sales increase by 40%?
5. What happens to each company’s net income if sales increase by 90%?
6. What happens to each company’s net income if sales decrease by 20%?
7. What happens to each company’s net income if sales decrease by 50%?
8. What happens to each company’s net income if sales decrease by 80%?
Analysis Component
9. Comment on the results from parts 3 through 8 in relation to the fixed- cost strategies of the two companies and the ratio values you computed in parts 1 and 2.



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  • CreatedNovember 26, 2013
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