Use the following information from separate companies a through f:

net income (loss) interest expense income taxes
a. $ 118,000 $ 62,540 $ 29,500
b. 112,600 32,654 40,536
c. 121,100 6,055 58,128
d. 100,300 44,132 42,126
e. 76,700 19,942 29,146
f. (33,040 ) 73,349 0

1. compute times interest earned.

2. which company indicates the strongest ability to pay interest expense as it comes due?

You are chairman of the board of a successful technology firm. there is a nominal federal corporate tax rate of 35 percent, yet the effective tax rate of the typical corporation is about 12.6%. your firm has been clever with use of transfer pricing and keeping money abroad and has barely paid any taxes over the last 5 years; during this same time period, profits were $28 billion. one member of the board feels that it is un-american to use various accounting strategies in order to avoid paying taxes. others feel that these are legal loopholes and corporations have a fiduciary responsibility to minimize taxes. one board member quoted what the ceo of exxon once said: “i’m not a u.s. company and i don’t make decisions based on what’s good for the u.s.” what are the alternatives? what are your recommendations? why do you recommend this course of action?

After the 2008 recession, the amount of reserves in the us banking system increased. because of federal reserve actions, required reserves increased from $44 billion to $60 billion. however, banks started holding more reserves than required. by january 2009, banks were holding $900 billion in excess reserves. the federal reserve started paying interest on the excess reserves that the banks held. what possible impact will these unused reserves have on the economy?

When the federal reserve buys bonds from or sells bonds to member banks, it is called monetary policy reserve ratio interest rate adjustment open market operations