Question

A company's fixed interest expense is $26,000, its income before interest expense and income taxes is $221,000. Its net income is $106,100. The company's times interest earned ratio equals:

Answer 1

8.5

Step-by-step explanation:

The company interest expense is $26,000

The income tax is $221,000

The net income is $106,100

Therefore the company times interest earned ratio can be calculated as follows

= Income tax/interest expense

= 221,000/ 26,000

= 8.5

Hence the company times interest earned ratio is 8.5