The following financial statement information is available for Barrett Corporation: $\begin{array}{lrr}&2014&2013\
\text { Net income } & \$ 115,000 & \$ 80,000 \
\text { Tax expense } & 50,000 & 29,000 \
\text { Interest expense } & 15,000 & 14,000\
\text { Dividends paid to preference }\
\text { shareholders }& 22,000 & 20,000 \
\text { Dividends paid to ordinary } & & \
\text { shareholders } & 15,000 & 10,000
\end{array}$ The times interest earned for 2014 is

Question

Quizplus · Accepted Answer

The times interest earned ratio is calculated as (Net Income + Tax Expense + Interest Expense) / Interest Expense. For 2014, it is (115,000 + 50,000 + 15,000) / 15,000 = 12.0 times.

The Following Financial Statement Information Is Available for Barrett Corporation