E13-5 (Algo) Computing a Commonly Used Solvency Ratio [LO 13-4, LO 13-5] According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2018. Let's see whether these changes are reflected in the income statement of Wizard Computers for the year ended December 31, 2018. Sales Revenue Cost of Goods Sold Gross Profit Selling, General, and Administrative Expenses Interest Expense Income before Income Tax Expense Income Tax Expense Net Income 2018 $ 118,000 2017 $ 147,000 69,000 78,700 49,000 68,300 37,800 40,600 680 565 10,520 2,500 27,135 6,800 $ 8,020 $ 20,335 Required: 1. Compute the times interest earned ratios for 2018 and 2017. 2. Does Wizard generate sufficient net income in both years (before taxes and interest) to cover the cost of debt financing?