During 2014, Patty's Pizza reported net income of $4,212 million, interest expense of $167 million and income tax expense of $1,372 million. During 2013, they reported net income of $3,568 million, interest expense of $163 million and income tax expense of $1,424 million. The times interest earned ratios for 2014 and 2013, respectively, are closest to:
A) 32.2 and 29.4 times.
B) 28.4 and 23.8 times.
C)34.4 and 31.6 times.
D)34.1 and 26.6 times.

Question

Quizplus · Accepted Answer

The times interest earned ratio is calculated as (Net Income + Interest Expense + Income Tax Expense) / Interest Expense. For 2014, it is (4212 + 167 + 1372) / 167 = 34.4 times. For 2013, it is (3568 + 163 + 1424) / 163 = 31.6 times.

During 2014, Patty's Pizza Reported Net Income of $4,212 Million