In a recent year Chandler Corporation had net income of $150000 interest expense of $40000 and tax expense of $20000. What was Chandler Corporation's times interest earned for the year?
A) 5.25
B) 4.75
C) 3.75
D) 4.25

Question

Quizplus · Accepted Answer

The times interest earned ratio is calculated by adding net income, interest expense, and tax expense together, then dividing by the interest expense. For Chandler Corporation, this calculation is ($150,000 + $40,000 + $20,000) / $40,000 = $210,000 / $40,000 = 5.25.

In a Recent Year Chandler Corporation Had Net Income of $150000