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E11-24 (similar to) The following financial information was obtained from the year ended 2018 income statements for Wilson Au
mpan expe Data Table for e Wilson Steinbeck ed rati 24 35,480 $ Net income 92,380 Income tax expense 13,940 30,180 Interest e
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Answer #1

1.

Times interest earned for Wilson = (Net Income + Interest Expense + Income Taxes)/ Interest Expense

= (35,480 + 350 + 13,940)/350

= 49,770/350

= 142.2 times

Times interest earned for Steinbeck = (Net Income + Interest Expense + Income Taxes)/ Interest Expense

= (92,380 + 3,200 + 30,180)/3,200

= 125,760/3,200

= 39.3 times

2.

Since Times interest earned for Wilson was higher, hence Wilson was better able to cover its interest expenses.

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