Question

For the most recent year, wilson enterprises had sales of $689,000, cost of goods sold of $470,300, depreciation expense of $61,200, and additions to retained earnings of $48,560. the firm currently has 12,000 shares of common stock outstanding, and the previous year's dividends per share were $1.18. assuming a 35 percent tax rate, what was the times interest earned ratio?

Answer 1

To compute the times interest earned ratio, we need the earnings before interest and taxes, which necessitates the knowledge of the interest expense. Without this detail, the ratio cannot be determined from the given information.

Step-by-step explanation:

To calculate the times interest earned ratio, we need to find out the earnings before interest and taxes (EBIT) by subtracting the cost of goods sold and depreciation expense from sales. Then, we divide EBIT by the interest expense. However, the question does not provide the actual interest expense. Without the interest expense amount, we cannot compute the times interest earned ratio. Instead, to make it clear that this is an important component in the calculation, an assumption about this missing data has to be made, or additional information should be obtained.