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2 January, 11:59

Selected Income Statement Data - for the year ending December 31, 2017: Net sales $4,885,340 Cost of goods sold (2,942,353) Selling expenses (884,685) Operating income 1,058,302 Interest expense (55,240) Earnings before income taxes 1,003,062 Income tax expense (401,225) Net income $ 601,837 Selected Statement of Cash Flow Data - for the year ending December 31, 2017: Cash flows from operations $1,456,084 Capital expenditures $745,862 Wilmington Corporation's times interest earned ratio in 2017 was: A. 20.57 B. 19.16 C. 10.89 D. 18.15

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  1. 2 January, 12:05
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    Option (b) is correct.

    Explanation:

    Given that,

    Net sales = $4,885,340

    Cost of goods sold = (2,942,353)

    Selling expenses = (884,685)

    Operating income = $1,058,302

    Interest expense = $ (55,240)

    Earnings before income taxes = $1,003,062

    Income tax expense = $ (401,225)

    Net income = $ 601,837

    EBIT = Net income + Income tax expense + Interest expense

    = $1,003,062 + $401,225 + $55,240

    = $1,058,302

    Times interest earned ratio in 2017:

    = EBIT : Interest expense

    = $1,058,302 : $55,240

    = 19.1582 or 19.16
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