According to the producer price index database maintained by the Bureau of Labor Statistics, the average...

 

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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 2016. Let's see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2016. 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 2015 2016 2016 $106,000 Required: 1. Compute the times interest earned ratios for 2016 and 2015. (Round your answers to 1 decimal place.) Times Interest Earned O Yes O No 63,000 43,000 36,600 560 5,840 1,500 $ 4,340 2015 $129,000 73,900 55,100 38,200 505 16,395 5,600 $ 10,795 2. Does Computer Tycoon generate sufficient net income in both years (before taxes and interest) to cover the cost of debt financing? 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 2016. Let's see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2016. 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 2015 2016 2016 $106,000 Required: 1. Compute the times interest earned ratios for 2016 and 2015. (Round your answers to 1 decimal place.) Times Interest Earned O Yes O No 63,000 43,000 36,600 560 5,840 1,500 $ 4,340 2015 $129,000 73,900 55,100 38,200 505 16,395 5,600 $ 10,795 2. Does Computer Tycoon generate sufficient net income in both years (before taxes and interest) to cover the cost of debt financing?

Answer rating: 100% (QA)

To compute the times interest earned ratios for 2016 and 2015 we need to use the following formula T... View the full answer