Fayer Corporation has provided the following financial data: Dividends on common
ID: 2560716 • Letter: F
Question
Fayer Corporation has provided the following financial data:
Dividends on common stock during Year 2 totaled $4,500. The market price of common stock at the end of Year 2 was $10.88 per share.
The company's times interest earned for Year 2 is closest to:
7.71
4.01
2.61
5.01
Balance SheetDecember 31, Year 2 and Year 1 Assets Year 2 Year 1 Current assets: Cash $161,000 $180,000 Accounts receivable 110,000 130,000 Inventory 181,000 160,000 Prepaid expenses 57,000 70,000 Total current assets 509,000 540,000 Plant and equipment, net 1,044,000 960,000 Total assets $1,553,000 $1,500,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $188,000 $160,000 Accrued liabilities 57,000 60,000 Notes payable, short term 36,000 40,000 Total current liabilities 281,000 260,000 Bonds payable 200,000 200,000 Total liabilities 481,000 460,000 Stockholders' equity: Common stock, $4 par value 200,000 200,000 Additional paid-in capital-common stock 80,000 80,000 Retained earnings 792,000 760,000 Total stockholders' equity 1,072,000 1,040,000 Total liabilities & stockholders' equity $1,553,000 $1,500,000
Explanation / Answer
Times interest earned=Net operating income/interest expense
=(70154/14000)
=5.01(Approx)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.