Concord Company's net income before interest and taxes (EBIT) was $270,000.
How to solve
We can use the formula for times interest earned (TIE) to solve for EBIT:
TIE = EBIT / Interest Expense
Given that TIE is 6.75 and interest expense is $40,000, we can set up the equation:
6.75 = EBIT / 40,000
Solving for EBIT:
EBIT = 6.75 * 40,000
EBIT = $270,000
Therefore, Concord Company's net income before interest and taxes (EBIT) was $270,000.
The Complete Question
An analysis of the income statement revealed that interest expense was $40,000. Concord Company's times interest earned was 6.75. What was the company's net income before interest and taxes (EBIT)?