Number of times interest charges are earned
The following data were taken from recent annual reports of Southwest Airlines, which operates a low-fare airline service to over 50 cities in the United States.
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Current Year
|
Preceding Year
|
|
Interest expense
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$105,000,000
|
$69,000,000
|
|
Income before income tax
|
278,000,000
|
1,058,000
|
a. Determine the number of times interest charges were earned for the current and preceding years. Round to one decimal place.
b. What conclusions can you draw?