Jones Petro Company reports the following consolidated statement of income:
|
Operating revenues |
$2,989 |
|
Costs and expenses: |
|
|
Cost of rentals and royalties |
543 |
|
Cost of sales |
314 |
|
Selling, service, administrative, and general expense |
1,424 |
|
Total costs and expenses |
2,281 |
|
Operating income |
708 |
|
Other income |
27 |
|
Other deductions (interest) |
60 |
|
Income before income taxes |
675 |
|
Income taxes |
309 |
|
Income before outside shareholders’ interests |
366 |
|
Outside shareholders’ interests |
66 |
|
Net income |
$300 |
Required
a. Compute the times interest earned.
b. Compute the fixed charge coverage.