Question

Quansi, Inc., reported the following on the company's income statement in 2016 and 2015:     2016     2015...

Quansi, Inc., reported the following on the company's income statement in 2016 and 2015:

    2016     2015
Interest expense $246,000 $270,600
Income before income tax expense 3,640,800 3,571,920

a. Determine the number of times interest charges were earned for 2016 and 2015. Round to one decimal place.

2016
2015

b. Is the number of times interest charges are earned improving or declining?

Homework Answers

Answer #1
2016 2015
Income before income tax expense $3,640,800 $3,571,920
Add: Interest expense 246,000 270,600
Income before interest and income tax $3,886,800 $3,842,520

a. Number of times interest charges were earned = Income before interest and income tax ÷ Interest expense

2016 3,886,800÷246,000 = 15.8
2015 3,842,520÷270,600 = 14.2

b. The number of times interest charges are earned improving. The number of interest charges increased from 14.2 to 15.8

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