During 2016, Patty's Pizza Reported Net Income of $4,212 Million

question 12

Multiple Choice

During 2016, Patty's Pizza reported net income of $4,212 million, interest expense of $167 million and income tax expense of $1,372 million. During 2015, Patty's reported net income of $3,568 million, interest expense of $163 million and income tax expense of $1,424 million. The times interest earned ratios for 2016 and 2015, respectively, are closest to:

• A)32.2 and 29.4 times.
• B)28.4 and 23.8 times.
• C)34.4 and 31.6 times.
• D)34.1 and 26.6 times.

---

Definitions:

Beta

A measure of a stock's volatility in relation to the overall market; a beta above 1 indicates higher than market volatility.

Market Risk Premium

The extra return over the risk-free rate that investors require to compensate them for the risk of investing in the stock market.

Risk-free Rate

The return on an investment with no risk of financial loss, often associated with government bonds.

Required Return

The minimum expected yield by investors for providing capital to a company or project.