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Town Company reported the following on its income statement:Income before income taxes $750,000Income tax expense 150,000Net income $600,000An analysis of the income statement revealed that interest expense
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Town Company reported the following on its income statement:Income before income taxes $750,000Income tax expense 150,000Net income $600,000An analysis of the income statement revealed that interest expense was $100,000. Town Company's times interest earned wasA. 7.5 times.B. 5 times.C. 6 times.D. 8.5 times.

User Jenique
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Answer:

D. 8.5 times

Step-by-step explanation:

The interest earned ratio= EBIT/ interest

EBIT=750000+100000=850000

The Interest earned ratio= 850000/100000= 8.5 times

The correct answer is D. 8.5 times.

User Ashazar
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