Please refer to Table 4-1 for the following questions.
Table 4-1
Stewart Company
Balance Sheet

-Based on the information in Table 4-1,the times interest earned ratio is
A) 32.33 times.
B) 23.75 times.
C) 19.00 times.
D) 12.33 times.

Question

Please refer to Table 4-1 for the following questions.
Table 4-1
Stewart Company
Balance Sheet
 
-Based on the information in Table 4-1,the times interest earned ratio is
A) 32.33 times. 
B) 23.75 times. 
C) 19.00 times. 
D) 12.33 times.

Quizplus · Accepted Answer

The times interest earned ratio can be calculated by dividing earnings before interest and taxes (EBIT) by interest expense. 
For the Stewart Company, EBIT is $950,000 and interest expense is $40,000, so the times interest earned ratio is:
$950,000 / $40,000 = 23.75 times. 
Therefore, the best choice is B.

Please Refer to Table 4-1 for the Following Questions