Compute times interest earned and comment

Assignment Help Financial Accounting

Reference no: EM133497258

Case: JBJ Antiques (JBJ) reported the following comparative income figures in 2006.

	(in thousands)
	2006	2005
Net sales	$701	$646
Other income	10	8
	$711	$654
Costs and expenses:
Cost of goods sold	$472	$408
Selling and general expenses	176	156
Interest	28	22
	$676	$586
Income before income taxes and extraordinary items	$ 35	$ 68
Income taxes	(15)	(30)
Income before extraordinary items	$ 20	$ 38
Extraordinary items-losses from fire		18
Net income	$ 20	$ 20

Your boss, the president of Henry Bank, is concerned about JBJs borrowing capacity. A representative of JBJ feels that there should be no problem, since net profits are the same with slightly higher sales.

Required:

Question: Compute times interest earned and comment on the bank's position.

Reference no: EM133497258

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