For the most recent year, Seether, Inc., had sales of $443,000, cost of goods so
ID: 2742155 • Letter: F
Question
For the most recent year, Seether, Inc., had sales of $443,000, cost of goods sold of $218,800, depreciation expense of $58,500, and additions to retained earnings of $50,700. The firm currently has 28,000 shares of common stock outstanding, and the previous year’s dividends per share were $1.40. The income tax rate is 31 percent.What was the EBIT?
How much in total dividends did the company pay? (Do not round intermediate calculations.)
Total dividends
What was the company's net income? (Do not round intermediate calculations.)
Net income
What was the company's earnings before tax (EBT)? (Do not round intermediate calculations. Round your answer to the nearest whole number
EBT
What was the company's interest payment? (Do not round intermediate calculations. Round your answer to the nearest whole number
What was the company's times interest earned ratio? (Enter rounded answer as directed, but do not use the rounded numbers in intermediate calculations. Round your answer to 2 decimal places
How much in total dividends did the company pay? (Do not round intermediate calculations.)
Explanation / Answer
EBIT = Sales - Cost of goods sold = 443000 - 218800 = $224200
Total dividends paid by company = No. of shares x Dividend per share = 28000 x 1.40 = $39200
Net Income = Addition to retained earnings + Dividend paid = 50700+39200 = $89900
EBT = Net Income / (1-tax) = 89900 / (1-0.39) = $130290
Interest payment = EBIT - EBT = 224200 - 130290 = $93910
Times interest earned ratio = Interest payment / EBIT = 93910 / 224200 = 0.42 times