The financial statements of Midwest Tours are given below.
-Refer to the financial statements of Midwest Tours.The firm's times interest earned ratio for 2009 is __________.
A)2.897
B)2.719
C)3.375
D)3.462
E)none of the above

Question

The financial statements of Midwest Tours are given below. 
-Refer to the financial statements of Midwest Tours.The firm's times interest earned ratio for 2009 is __________.
A)2.897 
B)2.719 
C)3.375 
D)3.462 
E)none of the above

Quizplus · Accepted Answer

The times interest earned ratio is calculated by dividing earnings before interest and taxes (EBIT) by interest expense.

For 2009: 
EBIT = $870,000 
Interest expense = $257,600

Times interest earned ratio = $870,000 / $257,600 = 3.375

The Financial Statements of Midwest Tours Are Given Below