SNL has sales of $2,250,000; a gross profit of $825,000; total operating costs of $620,000; income taxes of $74,800; total assets of $995,000; and interest expense of $18,000.What is SNL's times-interest-earned ratio?

Question

Quizplus · Accepted Answer

The times-interest-earned ratio is calculated as (Gross Profit - Operating Costs) / Interest Expense. Here, it's ($825,000 - $620,000) / $18,000 = $205,000 / $18,000 = 11.4.

SNL Has Sales of $2,250,000; a Gross Profit of $825,000;