Simple Simon's Balance Sheet and Income Statement Accounts Follow What Is Simple Simon's Times Interest Earned Ratio for 2010

question 179

Multiple Choice

Simple Simon's balance sheet and income statement accounts follow:
$\begin{array}{lrrr}\text { At December } 31&2011&2010&2009\\\text { Assets }\\\text { Cash } & \$ 30,872 & \$ 36,086 & \$ 37,974 \\\hline \text { Accounts receivable, net } & 89,476 & 63,151 & 50,632 \\\hline \text { Merchandise inventory } & 112,499 & 83,450 & 54,467 \\\hline \text { Prepaid expenses } & 9,942 & 9,473 & 4,219 \\\hline \text { Plant assets, net } & 291,143 & 268,126 & 244,108 \\\text { Total assets } & \$ 533,932 & \$ 460,286 & \$ 391,400\\\text { Liabilities and Equity }\\\text { Accounts payable } & \$ 130,290 & \$ 76,233 & \$ 50,632 \\\hline \text { Long-term notes payable secured by } & 98,372 & 103,748 & 107,769 \\\text { mortgages on plant assets } & 142,500 & 132,500 & 102,500 \\\hline \text { Common stock, } \$ 10 \text { par value } & 182,770 & 147,805 & 130,499\\\text { Total liabilities and equity }&\$533.932&\$460,286&\$391,400\end{array}$

What is Simple Simon's times interest earned ratio for 2010?

• A)3.57%
• B)4.22%
• C)3.69%
• D)2.75%
• E)2.57%

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Definitions:

Absolute Advantage

The ability of an entity to produce a good or offer a service more efficiently than its competitors when using the same amount of resources.

Absolute Advantage

The capability of an individual, company, or country to produce a good or service at a lower cost per unit than competitors.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than another entity, leading to more efficient trade and production.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than others.