The following data pertain to Mahler Company's operations for the year ended December 31, 2017:
Operating income : $800,000
Interest expense : 100,000
Income before income tax : 700,000
Income tax expense : 210,000
Net income : $490,000
The times interest earned ratio is
A) 4.9 to 1
B) 5.6 to 1
C) 7.0 to 1
D) 8.0 to 1

Question

The following data pertain to Mahler Company's operations for the year ended December 31, 2017: 
Operating income :  $800,000
Interest expense : 100,000
Income before income tax : 700,000
Income tax expense : 210,000
Net income : $490,000
The times interest earned ratio is
A) 4.9 to 1
B) 5.6 to 1
C) 7.0 to 1
D) 8.0 to 1

Quizplus · Accepted Answer

The times interest earned ratio is calculated as (Operating Income) / (Interest Expense) = $800,000 / $100,000 = 8.0 to 1.

The Following Data Pertain to Mahler Company's Operations for the Year