Determine the times interest earned ratio for the current

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Times interest earned

The following data were taken from recent annual reports of Caliber Company, which operates a low-fare airline service to more than 50 cities in the United States:

                                                 Current Year             Preceding Year

Interest expense                          $65,0000                        $71,000

Income before income tax              403,000 3                         12,400

Question a. Determine the times interest earned ratio for the current and preceding years. Round to one decimal place.

Question b. Although Caliber Company had enough earnings to pay interest in the preceding year, the _______ in this ratio will be ______ by the debtholders.

Reference no: EM132466155

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