A company had a fixed interest expense of $6,000,its income before interest expense and any income taxes was $18,000 and its net income was $8,400.The company's times interest earned ratio is equal to
A)0.33
B)0.71
C)1.40
D)3.00
E)12,000

Question

Quizplus · Accepted Answer

Times interest earned ratio = Income before interest and taxes / Interest expense

In this case, Income before interest and taxes = $18,000
Interest expense = $6,000
So, Times interest earned ratio = 18,000 / 6,000 = 3.00

Therefore, the answer is D) 3.00.

A Company Had a Fixed Interest Expense of $6,000,its Income