Problem 9-5A Computing and analyzing times interest earned LO A The following in

Question

Problem 9-5A Computing and analyzing times interest earned LO A The following informetion epplies to the questions Shown here are condensed Income statements for two different companles (both are organized as LLCs and pay no income taxes). Miller Company Sales Variable expenses (80%) $1,000,000 800,000 Income before Interest Interest expense (fixed) 200,000 60,000 Net Income $140,000 Weaver Company Sales variable expenses (60%) $1,000,000 600,000 Income before Interest Interest expense (fixed) 400,000 260,000 Net Income $ 140,000

Explanation / Answer

9 30 % Sales Increase Millar Weaver Millar Weaver Sales    1,000,000.00    1,000,000.00    1,300,000.00    1,300,000.00 VC        800,000.00        600,000.00    1,040,000.00        780,000.00 PBT        200,000.00        400,000.00        260,000.00        520,000.00          60,000.00        260,000.00          60,000.00        260,000.00 Net Incom        140,000.00        140,000.00        200,000.00        260,000.00 Net Increase          60,000.00        120,000.00 % increase 42.86% 85.71% 10 50 % Sales Increase Millar Weaver Millar Weaver Sales    1,000,000.00    1,000,000.00    1,500,000.00    1,500,000.00 VC        800,000.00        600,000.00    1,200,000.00        900,000.00 PBT        200,000.00        400,000.00        300,000.00        600,000.00          60,000.00        260,000.00          60,000.00        260,000.00 Net Incom        140,000.00        140,000.00        240,000.00        340,000.00 Net Increase        100,000.00        200,000.00 % increase 71.43% 142.86% 11 80 % Sales Increase Millar Weaver Millar Weaver Sales    1,000,000.00    1,000,000.00    1,800,000.00    1,800,000.00 VC        800,000.00        600,000.00    1,440,000.00    1,080,000.00 PBT        200,000.00        400,000.00        360,000.00        720,000.00          60,000.00        260,000.00          60,000.00        260,000.00 Net Incom        140,000.00        140,000.00        300,000.00        460,000.00 Net Increase        160,000.00        320,000.00 % increase 114.29% 228.57% 12 10 % Sales Decrease Millar Weaver Millar Weaver Sales    1,000,000.00    1,000,000.00        900,000.00        900,000.00 VC        800,000.00        600,000.00        720,000.00        540,000.00 PBT        200,000.00        400,000.00        180,000.00        360,000.00          60,000.00        260,000.00          60,000.00        260,000.00 Net Incom        140,000.00        140,000.00        120,000.00        100,000.00 Net Increase        (20,000.00)        (40,000.00) % increase -14.29% -28.57%

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