In a recent year Joey Corporation had net income of $150,000, interest expense of $40,000, and tax expense of $20,000. What was Joey Corporation's times interest earned for the year?
A) 5.25
B) 4.75
C) 3.75
D) 4.25

Question

Quizplus · Accepted Answer

Times interest earned is calculated as (Net Income + Interest Expense + Tax Expense) / Interest Expense. For Joey Corporation, it is ($150,000 + $40,000 + $20,000) / $40,000 = 5.25.

In a Recent Year Joey Corporation Had Net Income of $150,000