Town Company reported the following on its income statement: $$\begin{array} { l r }
\text { Income before income taxes } & \$ 750,000 \
\text { Income tax expense } & \underline { \$ 150,000 } \
\text { Net income } & \underline { \$ 600,000 }
\end{array}$$ An analysis of the income statement revealed that interest expense was $100,000.Town Company's times interest earned was

Question

Town Company reported the following on its income statement: $$\begin{array} { l r } 
\text { Income before income taxes } & \$ 750,000 \
\text { Income tax expense } & \underline { \$ 150,000 } \
\text { Net income } & \underline { \$ 600,000 }
\end{array}$$ An analysis of the income statement revealed that interest expense was $100,000.Town Company's times interest earned was

Quizplus · Accepted Answer

Times interest earned = Income before income taxes / Interest expense= $750,000 / $100,000= 8.5 times

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