The Following Information Comes from the Balance Sheets and Income

question 51

Multiple Choice

The following information comes from the balance sheets and income statements of Crosby Co.: $$\begin{array} { l r r } & \text { As of or for the Year ended Decermber 31 } \\& \text { Curent Year } & { \text { Prior Year } } \\\text { Cash } & \$ 24,000 & \$ 20,000 \\\text { Accourts receivable } & 38,000 & 44,000 \\\text { Irventory } & 64,000 & 50,000 \\\text { Property ard equipment } & 224,000 & 218,000 \\\text { Current liabilities } & 88,000 & 80,000 \\\text { Long-term liabilities } & 106,000 & 100,000 \\\text { Stockholders equity } & 156,000 & 152,000 \\\text { Net sales reverules } & 680,000 & 630,000 \\\text { Cost of goods sold } & 440,000 & 420,000 \\\text { Operating expenses } & 160,000 & 150,000 \\\text { Interest expense } & 10,000 & 8,000 \\\text { Income tax expense } & 18,000 & 16,000\end{array}$$ What is the times interest earned ratio for the current year?

• A)2.2
• B)5.2
• C)6.2
• D)8.0

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Definitions:

Renovation Cost

The expenses associated with updating or refurbishing an existing structure or space to improve its appearance or functionality.

Initial Investments

The initial outlay of cash required to start a project or an investment, often including purchase of equipment and other startup costs.

After-Tax Discount Rate

The discount rate that is applied to future cash flows after considering the effects of taxes.

Income Tax Rate

The percentage at which an individual or corporation is taxed on their income, which can vary depending on the amount of income and jurisdiction.