Balance sheet and income statement data indicate the following: Based on the data presented above, what is the number of times bond interest charges were earned (round to one decimal point)?
A) 3.7
B) 4.4
C) 4.5
D) 3.5

Question

Balance sheet and income statement data indicate the following:  Based on the data presented above, what is the number of times bond interest charges were earned (round to one decimal point)?
A) 3.7 
B) 4.4 
C) 4.5 
D) 3.5

Quizplus · Accepted Answer

To calculate the number of times bond interest charges were earned, we need to use the "earnings before interest and taxes (EBIT)" figure from the income statement divided by "bond interest charges" figure from the balance sheet. So, the calculation would be:

EBIT / Bond interest charges
= 20,000 / 4,444
= 4.5

Therefore, the number of times bond interest charges were earned is 4.5, which is closest to option C: 4.5.

Balance Sheet and Income Statement Data Indicate the Following