Reference no: EM132979183

According to the producer price index database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 3.8 percent between January and December 2016. Let's see whether these changes are reflected in the income statement of Computer Tycoon Inc. for the year ended December 31, 2016.

                                                                      2016              2015

Sales Revenue                                                $117,000         $145,500
Cost of Goods Sold                                            68,500          78,300
Gross Profit                                                        48,500         67,200
Selling, General, and Administrative Expenses            37,700             40,400
Interest Expense                                                        670              560
Income before Income Tax Expense                            10,130               26,240
Income Tax Expense                                                2,500               6,700
Net Income                                                            $7,630              $19,540

Required:

Question 1. Compute the times interest earned ratios for 2016 and 2015.