QUESTION 1 Coronado Company reported the following on its in

QUESTION 1 Coronado Company reported the following on its income statement: Income before income taxes Income tax expense Net income $690000 190000 500000 An analysis of the income statement revealed that interest ex O 8.3 times O 11.5 times O 9.3 times O12.5 times

Solution

Hence times interest earned=EBIT/interest expense

which is equal to

=(750,000/60,000)

which is equal to

=12.5 times.

EBIT(balance)(690,000+60,000)	750,000
Less:interest	60,000
EBT	690,000