The following information relates to Woolf Unlimited for the past two years. What is the times-interest-earned ratio for the current year?

Question

The following information relates to Woolf Unlimited for the past two years.  What is the times-interest-earned ratio for the current year?

Quizplus · Accepted Answer

The times-interest-earned ratio for the current year can be calculated as (Operating income + Interest income) / Interest expense. Without the actual values given, we cannot calculate the ratio. However, option B is the only one with a plausible answer for a healthy company as it indicates that the company's operating income is sufficient to cover interest expenses. Choices A, C, and D suggest that the company may be struggling to cover its interest expenses.

The Following Information Relates to Woolf Unlimited for the Past