The Fortune Company reported the following income for Year 2: What is the company's number of times interest is earned ratio?
A) 7 times
B) 6 times
C) 4 times
D) None of these answers is correct.

Question

The Fortune Company reported the following income for Year 2:  What is the company's number of times interest is earned ratio?
A) 7 times 
B) 6 times 
C) 4 times 
D) None of these answers is correct.

Quizplus · Accepted Answer

Times interest earned = (Net income + Taxes + Interest expense) ÷ Interest expense
Times interest earned = $35,000 ÷ $5,000 = 7 times

The Fortune Company Reported the Following Income for Year 2