Question

Desjardin Landscaping's income statement reports net income of $75,300, which includes deductions for interest expense of $11,500 and income taxes of $34,900. Its times interest earned is:10.6 times7.5 times4.0 times6.5 times0.15 times

Answer 1

10.6 times

Step-by-step explanation:

The formula to compute the times interest earned ratio is shown below:

Times interest earned ratio = (Earnings before interest and taxes) ÷ (Interest expense)

where,

Earnings before interest and taxes = Net income + Interest expense + income tax

= $75,300 + $11,500 + $34,900

= $121,700

And, the interest expense = $11,500

Now put these values to the above formula

So, the ratio would equal to

= $121,700 ÷ $11,500

= 10.6 times