Question

​Milton, Inc. provides the following income statement for​ 2019: Net Sales ​$240,000 Cost of Goods Sold ​110,000 Gross Profit ​$130,000 Operating​ Expenses: Selling Expenses ​45,000 Administrative Expenses ​12,000 Total Operating Expenses ​57,000 Operating Income ​$73,000 Other Income and​ (Expenses): Loss on Sale of Capital Assets ​(27 comma 00027,000​) Interest Expense ​(1 comma 0001,000​) Total Other Income and​ (Expenses) ​(28 comma 00028,000​) Income Before Income Taxes $ 45 comma 000$45,000 Income Tax Expense 5 comma 4005,400 Net Income $ 39 comma 600$39,600 Calculate the timesminus−interestminus−earned ratio.​ (Round your answer to two decimal​ places.)

Answer 1

Times interest earned ratio = Operating income/Interest expense

= $73,000/$1,000

= 73 times

Step-by-step explanation:

Times interest earned ratio is the ratio of operating income to interest expense. Operating income = $73,000 and interest expense = $1,000. The division of operating income by interest expense gives times interest earned ratio.