Question

A company's income before interest expense and income taxes is $350,000 and its interest expense is $100,000.Its times interest earned ratio is:_________.A) 0.29B) 3.50C) 2.50D) 1.75E) 0.50

Answer 1

B) 3.50

Step-by-step explanation:

The computation of the times interest earned ratio is shown below:

As we know that

Times interest earned ratio is

= Income before interest expense and income taxes ÷ interest expenses

= $350,000 ÷ $100,000

= 3.50

Hence, the times interest earned ratio is 3.50

Therefore the correct option is b.

We simply applied the above formula so that the correct value could come

And, the same is to be considered