Odessa Co.has current assets of $10 million and net income of $20 million.Current liabilities total $5 million,interest expense is $4 million,and income tax expense is $6 million.What is the times interest earned ratio for this company?
A)0.5
B)7.5
C)0.3
D)2.0

Question

Quizplus · Accepted Answer

Times Interest Earned = (Net Income + Interest Expense + Income Tax Expense)÷ Interest Expense
= ($20,000,000 + $4,000,000 + $6,000,000)÷ $4,000,000 = 7.5

Odessa Cohas Current Assets of $10 Million and Net Income of of $20