Question

Use the following information to answer this question. Thomas Company 2017 Income Statement ($ in millions)...

Use the following information to answer this question.

Thomas Company
2017 Income Statement
($ in millions)
Net sales $ 9,530
Cost of goods sold 7,760
Depreciation 465
Earnings before interest and taxes $ 1,305
Interest paid 104
Taxable income $ 1,201
Taxes 420
Net income $ 781
Thomas Company
2016 and 2017 Balance Sheets
($ in millions)
2016 2017 2016 2017
Cash $ 230 $ 260 Accounts payable $ 1,370 $ 1,385
Accounts rec. 1,000 900 Long-term debt 1,100 1,300
Inventory 1,810 1,695 Common stock 3,340 3,250
Total $ 3,040 $ 2,855 Retained earnings 640 890
Net fixed assets 3,410 3,970
Total assets $ 6,450 $ 6,825 Total liab. & equity $ 6,450 $ 6,825

What is the times interest earned ratio for 2017?

Homework Answers

Answer #1

TIE specifies the times of availabilty of funds ( EBIT) to pay Int.

Particulars Amount
EBIT $                           1,305.00
Int $                              104.00

Times Int earned = EBIT / Int
= 1305 / 104
= 12.5481
EBIT = Earnings before Int and Tax

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