Question

Which of the following companies would likely have the LEAST difficulty making the interest payments on its debts?

A. Company A with Net Income of $100,000, Interest Expense of $25,000, and Tax Expense of $15,000.
B. Company B with Net Income of $100,000, Interest Expense of $30,000, and Tax Expense of $10,000.
C. Company C with Net Income of $100,000, Interest Expense of $25,000, and Tax Expense of $20,000.

Answer 1

Company B would likely have the least difficulty making the interest payments on its debts due to its high net income and low tax expense.

Step-by-step explanation:

In order to determine which company would have the least difficulty making interest payments on its debts, we need to compare the net income, interest expense, and tax expense of each company. The company with the highest net income and the lowest interest and tax expenses would likely have the least difficulty making the interest payments.

Company A has a net income of $100,000, an interest expense of $25,000, and a tax expense of $15,000.

Company B has a net income of $100,000, an interest expense of $30,000, and a tax expense of $10,000.

Company C has a net income of $100,000, an interest expense of $25,000, and a tax expense of $20,000.

Out of the three companies, Company B would likely have the least difficulty making the interest payments on its debts since it has the highest net income and the lowest tax expense.