Question

A company's interest expense is $20,000. Its income before interest expense and income taxes is $140,000. Its net income is $58,800. The company's times interest earned ratio equals:_________ a) 0.42 b) 700 c) 2.38 d) 0.143 e) 0.34

Answer 1

7

Step-by-step explanation:

The company's times interest ratio is calculated as;

= Its income before interest expense and any income taxes ÷ Interest expense

= $140,000 ÷ $20,000

= 7