The Following Information Is from the Financial Records of Newton

question 121

Short Answer

The following information is from the financial records of Newton Company for Year 2:
$$\begin{array} { l r } \text { Sales } & \$ 620,000 \\\text { Interest expense } & 26,000 \\\text { Income tax expense } & 46,000 \\\text { Net income } & 104,000\end{array}$$ Required:
Calculate the number of times interest is earned for Newton in Year 2. (Round your answer to one decimal place.)

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Definitions:

Accounts Receivable

Outstanding payments from customers to a company for products or services already rendered.

Operating Activity

Refers to the primary revenue-generating activities of an organization, such as sales and service provision.

Direct Method

A cash flow statement reporting approach that lists major operating cash receipts and payments, used to show actual cash flows.

Cash Payments

Cash Payments are transactions where monetary value is transferred from one party to another in the form of cash or its equivalent to settle a debt or purchase a good or service.