Last year Jabber Company had a net income of $180,000,income tax expense of $62,000,and interest expense of $20,000.The company's times interest earned was closest to:
A) 4.90 times.
B) 9.00 times.
C) 10.00 times.
D) 13.10 times.

Question

Quizplus · Accepted Answer

The times interest earned (TIE) ratio is calculated as (Net Income + Income Tax Expense + Interest Expense) / Interest Expense. For Jabber Company, this is ($180,000 + $62,000 + $20,000) / $20,000 = $262,000 / $20,000 = 13.10 times.

Last Year Jabber Company Had a Net Income of $180,000,income