Company X has net sales revenue of $436,000, cost of goods sold of $343,000, and all other expenses of $90,000. What is the times interest earned ratio, if interest expense is $10,000 and income tax expense is
$1,000?
A) 1.4
B) .33
C) 1.3
D) .40

Question

Quizplus · Accepted Answer

The times interest earned ratio is calculated as (Net Income + Interest Expense + Tax Expense) / Interest Expense. Net Income = $436,000 - $343,000 - $90,000 = $3,000. Thus, the ratio is ($3,000 + $10,000 + $1,000) / $10,000 = 1.4.

Company X Has Net Sales Revenue of $436,000, Cost of Goods