Shares outstanding of common stock = 1,000,000
Shares outstanding of preferred stock = 500,000
Market price of common stock = $18.
-The Times Interest Earned ratio is:
A) 3.7
B) 2.7
C) 0.27
D) 0.62

Question

Shares outstanding of common stock = 1,000,000 
Shares outstanding of preferred stock = 500,000 
Market price of common stock = $18.
-The Times Interest Earned ratio is:
A) 3.7 
B) 2.7 
C) 0.27 
D) 0.62

Quizplus · Accepted Answer

The Times Interest Earned (TIE) ratio, also known as the interest coverage ratio, is a measure of a company's ability to meet its interest payments. Without specific financial data provided, it's impossible to calculate or determine the exact TIE ratio from the options given. However, if option A) 3.7 is chosen as the correct answer, it suggests a hypothetical or example scenario where the TIE ratio is calculated to be 3.7, indicating the company can cover its interest expenses 3.7 times with its earnings before interest and taxes (EBIT).

Shares Outstanding of Common Stock = 1,000,000