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Determine the times interest earned ratio

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Question - Times Interest Earned

The following data were taken from recent annual reports of Caliber Company, which operates a low-fare airline service to more than 50 cities in the United States:

 

Current Year

Preceding Year

Interest expense

$58,000

$64,000

Income before income tax

417,600

358,400

a. Determine the times interest earned ratio for the current and preceding years.

b. Although Caliber Company had enough earnings to pay interest in the preceding year, the _______ in this ratio will be _______ by the debt holders.

Reference no: EM132191240

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