Question

Hsu company reported the following on its income statement:line item description

amount income before income tax expense $395,371
income tax expense (118,611)
net income $276,760 interest
expense was $68,221.

hsu company's times interest earned ratio is

Answer 1

The times interest earned ratio is a measure of a company's ability to cover its interest expenses with its operating income. In this case, the company's times interest earned ratio is 5.80.

Step-by-step explanation:

The times interest earned ratio is a measure of a company's ability to cover its interest expenses with its operating income. It is calculated by dividing the company's operating income by its interest expenses. In this case, the company's operating income before income tax expense is $395,371 and its interest expense is $68,221.

To calculate the times interest earned ratio, you would divide the operating income by the interest expense:

Times interest earned ratio = Operating income / Interest expense

Using the given numbers:

Times interest earned ratio = $395,371 / $68,221 = 5.80

Therefore, the company's times interest earned ratio is 5.80.