Consolidated Industries Has Total Interest Charges of $20,000 Per Year

question 100

Multiple Choice

Consolidated Industries has total interest charges of $20,000 per year. Sales of $2 million generated an operating income of $220,000 and an after-tax profit of 6% of sales. The firm has a marginal tax rate of 39%. What is the firm's times-interest-earned ratio?

• A) 10
• B) 11
• C) 12
• D) 13

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Definitions:

After-The-Fact Judgments

Evaluations or decisions made after an event has occurred, often based on the outcomes rather than prior known information.

State Of Mind

The particular condition of the mind or feelings at a specific time, often influenced by one’s circumstances, mood, or environment.

Insanity Defense

A legal defense stating that a defendant was unable to understand the nature of their actions or distinguish right from wrong due to a mental disorder at the time of the crime.

Social Factors

Elements within society, such as family, education, income, and religion, that influence an individual's life choices and opportunities.