The Following Information Was Taken from the Statement of Earnings

question 29

Essay

The following information was taken from the statement of earnings of The W D Company for the years 20X0 through 20X2 (in millions): $$\begin{array} { | l | r | r | r | } \hline & \underline { \mathbf { 2 0 X 2 } } & \underline { \mathbf { 2 0 X 1 } } & \underline { \mathbf { 2 0 X 0 } } \\\hline \text { Interest expense } & \mathbf { \$ 6 1 2 } & \mathbf { \$ 6 2 } & \mathbf { \$ 6 9 3 } \\\hline \text { Income taxes } & 1,104 & 1,397 & 1,421 \\\hline \text { Profit } & 1,300 & 1,850 & 1,966 \\\hline\end{array}$$ (1) Calculate the times interest earned ratio for 20X0 through 20X2. (2) Comment on the sufficiency of the ratio.

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Definitions:

Marxism

A socio-economic and political theory developed by Karl Marx, emphasizing the struggle between classes, the role of labor, and the eventual leading to a classless society.

Politically Motivated

Actions or decisions driven by political reasons, aims, or influences rather than by personal or ethical considerations.

Jacob Lawrence

An African-American painter known for his portrayal of African-American life and history through his series of narrative paintings.

The Migration of the Negro

A series of paintings by artist Jacob Lawrence depicting the mass movement of African Americans from the rural South to the urban North in the early 20th century.