Refer to the Following Selected Financial Information from Shakley's Incorporated

question 135

Multiple Choice

Refer to the following selected financial information from Shakley's Incorporated. Compute the company's times interest earned for Year 2. $$\begin{array} { | l | r | r | r } \hline & { \text { Year 2 } } &{ \text { Year 1 } } \\\hline \text { Net sales } & \$ 478,500 & \$ 426,250 \\\hline \text { Cost of goods sold } & 276,300 & 250,120 \\\hline \text { Interest expense } & 9,700 & 10,700 \\\hline \text { Net income before tax } & 67,250 & 52,680 \\\hline \text { Net income after tax } & 46,050 & 39,900 \\\hline \text { Total assets } & 317,100 & 288,000 \\\text { Total liabilities } & 181,400 & 167,300 \\\hline \text { Total equity } & 135,70 0 & 120,700 \\\hline\end{array}$$

• A) 6.9.
• B) 4.8.
• C) 5.8.
• D) 14.0.
• E) 7.9.

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Definitions:

Behaviourism

A psychological approach to understanding abnormal behaviour devised by John B. Watson (1858–1935), which declared that psychology must be restricted to the study of observable features, that is, the behaviour of organisms. Watson considered abnormal functioning to be learned and so believed it could be unlearned. His model for learning was derived from Ivan Pavlov’s (1849–1936) studies of classical conditioning.

Classical Conditioning

A learning process where a neutral stimulus becomes associated with a meaningful stimulus and acquires the capacity to elicit similar responses.

Watson

John B. Watson, an American psychologist who established the psychological school of behaviorism.

Early Behaviourists

Psychologists or researchers in the early 20th century who focused on observable behaviors rather than internal processes, founding behaviorism.