Marble Comics' times interest earned ratio is:
A) 0.34
B) 1.46
C) 1.95
D) 2.95
E) 4.80

Question

Marble Comics' times interest earned ratio is:
A) 0.34 
B) 1.46 
C) 1.95 
D) 2.95 
E) 4.80

Quizplus · Accepted Answer

The times interest earned ratio is calculated by dividing the earnings before interest and taxes (EBIT) by the interest expense.

From the given balance sheet and income statement, we can calculate:

EBIT = Operating income + Nonoperating income - Nonoperating expenses - Income taxes
EBIT = 8,618 + 1,112 - 2,685 - 2,076
EBIT = 5,969

Interest expense = 2,024

Times interest earned ratio = EBIT / Interest expense
Times interest earned ratio = 5,969 / 2,024
Times interest earned ratio = 2.95

Therefore, the answer is D) 2.95.

Marble Comics' Times Interest Earned Ratio Is