Broch Corporation's income statement appears below:
$\begin{array}{lr}\text { Income Statement }\
\text {Sales (all on account) }&\$1,220,000\
\text {Cost of goods sold }&760,000\
\text { Gross margin}&460,000\
\text {Operating expenses. }&415,692\
\text {Net operating income }&44,308\
\text {Interest expense }&14,000\
\text {Net income before taxes }&30,308\
\text {Income taxes (35\%) }&10,608\
\text {Net income }&\$19,700\
\end{array}$
The company's times interest earned ratio is closest to:

Question

Broch Corporation's income statement appears below:
$\begin{array}{lr}\text { Income Statement }\
\text {Sales (all on account) }&\$1,220,000\
\text {Cost of goods sold }&760,000\
\text { Gross margin}&460,000\
\text {Operating expenses. }&415,692\
\text {Net operating income }&44,308\
\text {Interest expense }&14,000\
\text {Net income before taxes }&30,308\
\text {Income taxes (35\%) }&10,608\
\text {Net income }&\$19,700\
\end{array}$
 The company's times interest earned ratio is closest to:

Quizplus · Accepted Answer

The times interest earned ratio is calculated as (Net Operating Income + Interest Expense) / Interest Expense. Using the given data: (44,308 + 14,000) / 14,000 = 58,308 / 14,000 = 4.164, which rounds to approximately 4.17, not directly matching any of the provided options. However, the correct approach to calculate the times interest earned ratio is actually Net Operating Income / Interest Expense = 44,308 / 14,000 = 3.16, which matches option C.

Broch Corporation's Income Statement Appears Below The Company's Times Interest Earned Ratio Is Closest To: A)

Broch Corporation's Income Statement Appears Below The Company's Times Interest Earned Ratio Is Closest To:
A)