Lasch Corporation has provided the following financial data from its balance sheet and income statement: The company's times interest earned ratio for Year 2 is closest to:
A) 1.43
B) 3.47
C) 2.43
D) 1.00

Question

Lasch Corporation has provided the following financial data from its balance sheet and income statement:  The company's times interest earned ratio for Year 2 is closest to:
A) 1.43 
B) 3.47 
C) 2.43 
D) 1.00

Quizplus · Accepted Answer

The times interest earned ratio is calculated as follows:

Times Interest Earned = EBIT / Interest Expense

Using the data provided, we can calculate the ratio for Year 2 as:

Times Interest Earned = $245,000 / $100,000
Times Interest Earned = 2.45

Therefore, the closest answer choice is C) 2.43.

Lasch Corporation Has Provided the Following Financial Data from Its