Solved

Below Is Information for Year Ended 12/31/05 for Company a and Company

Question 46

Multiple Choice

Below is information for year ended 12/31/05 for Company A and Company B.  Company A  Company B  Interest expense $400$ Tax expense (40%) 400400 Net income 600600 Total assets −12/31/0510,00010,000 Total debt 5,0000 Equity 5,00010,000\begin{array}{lrr}&\text { Company A }&\text { Company B }\\\text { Interest expense } & \$ 400 & \$ \\\text { Tax expense }(40 \%) & 400 & 400 \\\text { Net income } & 600 & 600 \\\text { Total assets }-12 / 31 / 05 & 10,000 & 10,000 \\\text { Total debt } & 5,000 & 0 \\\text { Equity } & 5,000 & 10,000\end{array}
-Company A capitalized $100 in interest costs, the pension obligation, during the year. Times interest earned ratio, after necessary adjustments, for Company A is:


A) 3.5.
B) 2.8.
C) 2.0.
D) 1.2.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q41: Which of the following is likely to

Q42: Two companies, A and B, both

Q43: The higher the cash to current liabilities

Q44: An increase in the credit days offered

Q45: An increase in the current ratio due

Q47: Sellograph Corporation reports sales of $10

Q48: An analyst should treat preferred stock on

Q49: Which of the following is not a

Q50: If a company switches from FIFO to

Q51: Refer to the financial statements for