Problem 28-21 Interpreting financial ratios

Here are some data for five companies in the same industry:

	Company Code
	A	B	C	D	E
EBIT	11.44	33.44	110.44	3.74	96.24
Interest expense	5.20	15.20	50.20	2.20	1.20

a. Calculate a measure of times-interest-earned for the industry.

b. Calculate a measure of times-interest-earned for each company.

c. Calculate the average of the times-interest-earned ratios for the individual companies.

d. Does changing the method of calculation make a significant difference to the end result?

Calculate a measure of times-interest-earned for the industry. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Times-interest-earned

• Calculate a measure of times-interest-earned for each company. (A negative answer should be indicated by a minus sign. Round your answers to 1 decimal place.)

• Company Code	Times-Interest-Earned
  A
  B
  C
  D
  E

Calculate the average of the times-interest-earned ratios for the companies. (Do not round intermediate calculations. Round your answer to 1 decimal place.)

Average times-interest-earned ratio

• Does changing the method of calculation make a significant difference to the end result?

  	Is there a significant difference to the end result?