Last year, Mocha's Coffee Shop Inc.'s income statement reported the following: profit, $227,500; interest expense, $45,000; and income tax expense, $78,475.The company's times interest earned ratio is

Question

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The times interest earned ratio is calculated as (Profit + Interest Expense + Income Tax Expense) / Interest Expense. Here, it is ($227,500 + $45,000 + $78,475) / $45,000 = 7.8 times.

Last Year, Mocha's Coffee Shop Inc