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A company's fixed interest expense is 8000 its income before interest expense and income taxes is 32000 Its net income is 9600 The company's times interest earned ratio is?
Wiki User
∙ 9y ago
Formula for times interest earned = earning before interest and tax / interest expense
Times interest earned = 32000 / 8000 = 4 times
Wiki User
∙ 9y ago
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The number of times interest charges are earned is computed as?
Type y income before income tax plus interest expense, divided by interest expense our answer here...
What is the formula for times interest earned ratio?
Times Interest Earned = Operating Income/ Interest Expense.
What is a spread ratio?
Spread Ratio: Interest Earned / Interest Expense
What is spread ratio?
Spread Ratio: Interest Earned / Interest Expense
How do you calculate times interest earned if there was no interest expense?
Well that is easy there is none and there is no way you can do that
If a firm has both interest expense and lease payments would times interest earned be smaller than fixed charge coverage?
times interest earned be smaller than fixed charge coverage
What is times burden covered ratio?
The times interest earned ratio is a financial metric that indicates a company's ability to meet its interest obligations with its operating income. It is calculated by dividing earnings before interest and taxes (EBIT) by interest expense. A higher ratio indicates a company is better able to cover its interest payments.
What is accured interest?
Accreud interst is interst payable that has not been paid yet: Double entry: Debit : Say Laon Interest Account Credit: Interest Payable Account Accrued Interest: This is the interest which we have earned but not yet received. Example: If there is a contract that we will receive the interest on money landed to somebody of $ 1200 at the end of the year then after 1 month we have earned the interest of $ 100 but not yet received so we will show that $ 100 in the asset side of balance sheet as accrued interest. The above is Accrued Interest Income. Similarly, you can have Accrued Interest Expense. So, using the above example, if you were the borrower, at the end of the first month you would debit Interest Expense for $100 and credit a liability account called Accrued Interest.
What is the difference between dividends and interest expense?
Interest Expense is usually calculated by (Carrying Value of Liability*Yield Rate * Time). Carrying Value is the actual present value of the liability (including discounts earned, etc) Interest Expense is the money that actually goes out of the firm. Interest Paid is calculated by (Face Value of Liability*Interest Rate * Time). Interest Paid is the fair-value of dues from the firm, but is not the actual value of the liability. Interest Expense is the amount reflected in the books of the firm, and is usually higher than Interest Paid. This is because Interest Expense often includes the cost of discount amortization(this is necessary when the bond/other liability was gained at a discount. The amortization is worked into the formula above, and hence gives an amount higher than interest paid. This gives the total interest expensed by the Company.) Hope this helps. Cheers
How does one calculate times interest earned?
A times interest earned is calculated to determine how well a business could pay off its debts. It is calculated by taking the company's earnings before taxes and interest and dividing it by the interest on bonds payable and other debt.
Interest earned on interest is known as?
Compound Interest
Show me How do you prepare an income statement?
fees earned-950,000 office expense -222,000 miscellaneous expense-16,000 wage expense-478,000
