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What is Lori times interest earned

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Question - On January 1, Year One, Lori Inc. signed a five-year finance lease for the use of an asset. Payments are $5,000 on each January 1, beginning with Year One. The implicit rate is 6 percent which is known by Lori Inc. The present value of an annuity due of $1 at 6 percent for five periods is $4.46511.

Required -

1. What is Lori's interest expense for Year One?

2. Assume Lori's reported earnings for Year One before interest and taxes are $18,224. What is Lori's times interest earned?

3. Assume that on January 1, Year One, before signing this lease agreement, Lori reported assets of $500,000 and liabilities of $220,000. What impact did signing this contract have on the company's debt-to-equity ratio?

Reference no: EM132667947

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