Thrasher Company reported income before taxes of $180,000.The company is in a 30% income tax bracket.Also,Thrasher's income statement contained a charge for interest expense amounting to $60,000.Based on this information alone,what is the company's times-interest-earned ratio?

Question

Quizplus · Accepted Answer

EBIT = Income before taxes of $180,000 + Interest expense of $60,000 = $240,000
Times-interest-earned ratio = EBIT of $240,000 ÷ Interest expense of $60,000 = 4.0

Thrasher Company Reported Income Before Taxes of $180,000