Data from Lheureux Corporation's most recent balance sheet and the company's income statement appear below:

-The times interest earned ratio for Year 2 is closest to:
A) 2.22
B) 4.17
C) 3.17
D) 5.95

Question

Data from Lheureux Corporation's most recent balance sheet and the company's income statement appear below:
  
-The times interest earned ratio for Year 2 is closest to:
A) 2.22 
B) 4.17 
C) 3.17 
D) 5.95

Quizplus · Accepted Answer

Times interest earned = Earnings before interest expense and income taxes ÷ Interest expense
= $75 ÷ $18 = 4.17 (rounded)

Data from Lheureux Corporation's Most Recent Balance Sheet and the Company's