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Determine the times interest earned ratio for the current

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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                 $68,000                               $75,000

Income before income tax        421,600                               322,500

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: EM132597319

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