The consolidated statement of earnings of Anonymous Corporation for the year ended December 31, 2007, is as follows:
|
Net sales
|
$1,550,010,000
|
|
Other income, net
|
10,898,000
|
|
|
1,560,908,000
|
|
Costs and expenses:
Cost of goods sold
|
1,237,403,000
|
|
Depreciation and amortization
|
32,229,000
|
|
Selling, general, and administrative
|
178,850,000
|
|
Interest
|
37,646,000
|
|
|
1,486,128,000
|
|
Earnings from continuing operations before
income taxes and equity earnings
|
74,780,000
|
|
Income taxes
|
37,394,000
|
|
Earnings from continuing operations before equity earnings Equity in net earnings of unconsolidated
subsidiaries and affiliated companies
|
37,386,000
27,749,000
|
|
Earnings from continuing operations
Earnings (losses) from discontinued operations, net of applicable income taxes
|
65,135,000
6,392,000
|
|
Net earnings
|
$71,527,000
|
Required
a. Compute the times interest earned for 2007.
b. Compute the times interest earned for 2007, including the equity income in the coverage.
c. What is the impact of including equity earnings from the coverage? Why should equity income be excluded from the times interest earned coverage?