Tweedle Corporation's most recent balance sheet and income statement appear below:
| Balance Sheet |
| December 31, Year 2 and Year 1 |
| (in thousands of dollars) |
| Year 2 | Year 1 |
|---|
| Assets | | |
|---|
| Current assets: | | |
|---|
| Cash | $ 140 | $ 130 |
|---|
| Accounts receivable, net | 200 | 210 |
|---|
| Inventory | 150 | 180 |
|---|
| Prepaid expenses | 20 | 20 |
|---|
| Total current assets | 510 | 540 |
|---|
| Plant and equipment, net | 950 | 910 |
|---|
| Total assets | $ 1,460 | $ 1,450 |
|---|
| Liabilities and Stockholders' Equity | | |
|---|
| Current liabilities: | | |
|---|
| Accounts payable | $ 130 | $ 150 |
|---|
| Accrued liabilities | 70 | 70 |
|---|
| Notes payable, short term | 70 | 60 |
|---|
| Total current liabilities | 270 | 280 |
|---|
| Bonds payable | 170 | 190 |
|---|
| Total liabilities | 440 | 470 |
|---|
| Stockholders’ equity: | | |
|---|
| Common stock, $1 par value | 200 | 200 |
|---|
| Additional paid-in capital | 320 | 320 |
|---|
| Retained earnings | 500 | 460 |
|---|
| Total stockholders’ equity | 1,020 | 980 |
|---|
| Total liabilities & stockholders’ equity | $ 1,460 | $ 1,450 |
|---|
| Income Statement |
| For the Year Ended December 31, Year 2 |
| (in thousands of dollars) |
| Sales (all on account) | $ 1,190 |
|---|
| Cost of goods sold | 710 |
|---|
| Gross margin | 480 |
|---|
| Selling and administrative expense | 226 |
|---|
| Net operating income | 254 |
|---|
| Interest expense | 25 |
|---|
| Net income before taxes | 229 |
|---|
| Income taxes (30%) | 69 |
|---|
| Net income | $ 160 |
|---|
The times interest earned ratio for Year 2 is closest to:
▸ 6.40
▸ 9.16
▸ 14.51
▸ 10.16
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