Question

Milva Company estimates that its interest charges for this year will be $710.00 and that its...

Milva Company estimates that its interest charges for this year will be $710.00 and that its net income will be $3,010.00. The company’s tax rate is 30 percent. What is Milva Company estimated times interest-earned.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Solution :

The formula for calculating estimated times interest earned = EBITDA / Total interest payable

As per the information given in the question we have Net Income = $ 3,010

Statement showing calculation of EBITDA (Earnings before Interest, taxes, Depreciation & amortization )

Sl.No. Particulars Amount
1 Net Income after interest and taxes $ 3,010
2 Add : Taxes @ 30 % ( $ 3,010 * 30 / 70 ) $ 1,290
3 Net Income before taxes and after Interest $ 4,300
4 Add : Interest $ 710
5 Earnings before Interest, taxes, Depreciation & amortization $ 5,010

Thus Times interest earned for Milva company = $ 5,010 / $ 710 = 7.0563

= 7.06 (when rounded off to two decimals)

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
3. Platek Corporation has total interest charges of $50,000 per year, sales of $400,000, a tax...
3. Platek Corporation has total interest charges of $50,000 per year, sales of $400,000, a tax rate of 40 percent, and a net profit margin of 15 percent. What is the firm’s times interest earned ratio? a. 2x b. 3x c. 4x d. 6x e. none of the above
Times interest earned Berry Company reported the following on the company's income statement in two recent...
Times interest earned Berry Company reported the following on the company's income statement in two recent years:     Current Year     Prior Year Interest expense $293,000 $322,300 Income before income tax expense 3,545,300 4,189,900 a. Determine the number of times interest charges were earned for current Year and prior Year. Round to one decimal place. Current Year Prior Year b. Is the number of times interest charges are earned improving or declining?
imes interest earned Berry Company reported the following on the company's income statement in two recent...
imes interest earned Berry Company reported the following on the company's income statement in two recent years:     Current Year     Prior Year Interest expense $353,000 $423,600 Income before income tax expense 5,542,100 6,777,600 a. Determine the number of times interest charges were earned for current Year and prior Year. Round to one decimal place. Current Year fill in the blank 1 Prior Year fill in the blank 2 b. Is the number of times interest charges are earned improving or declining?
Part A. Pigwidgeon Company charges a selling price of $30 per unit for its single product,...
Part A. Pigwidgeon Company charges a selling price of $30 per unit for its single product, incurs variable costs of $14 per unit, and total fixed costs of $280,000. What unit sales volume is necessary to earn a net income before tax of $40,000? Part B. Pigwidgeon Company charges a selling price of $30 per unit for its single product, incurs variable costs of $14 per unit, and total fixed costs of $280,000. What sales volume is necessary to earn...
Times interest earned Loomis, Inc. reported the following on the company’s income statement in two recent...
Times interest earned Loomis, Inc. reported the following on the company’s income statement in two recent years: Current Year Prior Year Interest expense $231,000 $277,200 Income before income tax expense 2,887,500 3,381,840 a. Determine the times interest earned ratio for the current year and the prior year. Round to one decimal place. Current year Prior year b. Is the number of times interest charges are earned improving or declining? Improving
Consider a company with a cash coverage ratio of 4.2 and the following information: Sales of...
Consider a company with a cash coverage ratio of 4.2 and the following information: Sales of $25.6 million, Cost of goods sold of $14 million, Depreciation of 7.7 million. What is the company’s interest expense? What is its times interest earned ratio? If the tax rate is 21% what is its net income?
During the year, Belyk Paving Co. had sales of $2,275,000. Cost of goods sold, administrative and...
During the year, Belyk Paving Co. had sales of $2,275,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,285,000, $535,000, and $420,000, respectively. In addition, the company had an interest expense of $245,000 and a tax rate of 21 percent. (Ignore any tax loss carryforward provision and assume interest expense is fully deductible.) A. What is Belyk Paving Company’s net income? B. What is Belyk Paving Company’s operating cash flow? C. Determine Belyk Paving Company’s Cash...
Alvarez Company had the following results: Long-term debt (average rate of interest is 8%) $400,000 Interest...
Alvarez Company had the following results: Long-term debt (average rate of interest is 8%) $400,000 Interest expense 42,000 Net income 58,000 Income tax 35,000 Depreciation and amortization expense 20,000 Operating income 126,000 What is the Times Interest Earned ratio? a. 3.7 b. 3.0 c. 3.2 d. 9.5 e. 1.4
B company sold 100,000 units on credit during 2019. The company estimates that 1% of net...
B company sold 100,000 units on credit during 2019. The company estimates that 1% of net credit sales will become uncollectible. The net credit sales for 2019 are $800,000. It began the year with an $1,700 balance in its allowance for bad debts and end the year with an $6,700 balance. The company’s accountant reported bad debts expense on the income statement and tax form of $8,000 is this the correct reported bad debts expense on the income statement? or...
During the year, the Senbet Discount Tire Company had gross sales of $1.21 million. The company’s...
During the year, the Senbet Discount Tire Company had gross sales of $1.21 million. The company’s cost of goods sold and selling expenses were $590,000 and $243,000, respectively. The company also had notes payable of $820,000. These notes carried an interest rate of 6 percent. Depreciation was $120,000. The tax rate was 25 percent. a. What was the company’s net income? b. What was the company’s operating cash flow
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT