In a recent year, Joey Corporation had net income of $150,000, interest expense of $40,000, and tax expense of $20,000.What was Joey Corporation's times interest earned
For the year?

Question

Quizplus · Accepted Answer

The times interest earned ratio is calculated as (Net Income + Interest Expense + Tax Expense) / Interest Expense. For Joey Corporation, this would be ($150,000 + $40,000 + $20,000) / $40,000 = $210,000 / $40,000 = 5.25.

In a Recent Year, Joey Corporation Had Net Income of $150,000