Country Company reported the following on its income statement: $$\begin{array} { l r }
\text { Income before income taxes } & \$ 850,000 \
\text { Income tax expense } & \underline { 250,000 } \
\text { Net income } & \underline { \underline { \$ 650,0000 } }
\end{array}$$ An analysis of the income statement revealed that interest expense was $100000. Country Company's times interest earned was

Question

Country Company reported the following on its income statement: $$\begin{array} { l r } 
\text { Income before income taxes } & \$ 850,000 \
\text { Income tax expense } & \underline { 250,000 } \
\text { Net income } & \underline { \underline { \$ 650,0000 } }
\end{array}$$ An analysis of the income statement revealed that interest expense was $100000. Country Company's times interest earned was

Quizplus · Accepted Answer

The times interest earned ratio is calculated as (Income Before Income Taxes + Interest Expense) / Interest Expense. Here, it's ($850,000 + $100,000) / $100,000 = $950,000 / $100,000 = 9.5 times.

Country Company Reported the Following on Its Income Statement An Analysis of the Income Statement Revealed That Interest Expense