The Following Information Is from the Financial Records of Newton

question 55

Essay

The following information is from the financial records of Newton Company for Year 2: $\begin{array}{|l|r|}\hline \text { Sales } & \$ 620,000 \\\hline \text { Interest expense } & 26,000 \\\hline \text { Income tax expense } & 46,000 \\\hline \text { Net income } & 104,000 \\\hline\end{array}$ 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:

Carrying Costs

Expenses incurred by holding inventory over a period, including storage costs, insurance, and opportunity costs.

Credit Policy Effects

The impact of a company's credit policy on its operations, including effects on sales volume, customer relationships, and cash flow.

Cost Factor

A multiplier or rate that helps in estimating the cost of a project, task, or operation based on certain parameters or variables.

Cash Discount

A reduction in the invoice price offered to buyers as an incentive for early payment.