Question

A company's interest expense is $20,000. Its income before interest expense and income taxes is $140,000. Its net income is $58,800. The company's times interest earned ratio equals:

Answer 1

7 times

Step-by-step explanation:

Interest expense = $20,000

Income before interest and tax = $140,000

Time interest earned ratio = Income before interest and tax / Interest expense

Time interest earned ratio = $140,000 / $20,000

Time interest earned ratio = 7 times