The following financial statement information is available for Long Corporation: $\begin{array}{lrr}&2020&2019\
\text { Net income } & \$ 115,000 & \$ 80,000 \
\text { Income tax expense } & 30,000 & 29,000 \
\text { Interest expense } & 18,000 & 14,000 \
\text { Dividends paid to preferred } & &\\text { stockholders } & 22,000 & 20,000 \
\text { Dividends paid to preferred } & & \
\text { stockholders } & 15,000 & 10,000
\end{array}$ The times interest earned for 2020 is

Question

Quizplus · Accepted Answer

The times interest earned ratio is calculated as (Net Income + Interest Expense + Income Tax Expense) / Interest Expense. For 2020, this would be $(115,000 + 18,000 + 30,000) / 18,000 = 163,000 / 18,000 = 9.1$ times.

The Following Financial Statement Information Is Available for Long Corporation