The following information relates to Belcher Unlimited for the past two years. The times-interest-earned ratio for the current year is
A)47.0 times.
B)20.5 times.
C)5)3 times.
D)1)6 times.

Question

The following information relates to Belcher Unlimited for the past two years.  The times-interest-earned ratio for the current year is
A)47.0 times. 
B)20.5 times. 
C)5)3 times. 
D)1)6 times.

Quizplus · Accepted Answer

The times-interest-earned ratio is calculated as earnings before interest and taxes (EBIT) divided by interest expense. For the current year, Belcher Unlimited had EBIT of $210,000 and interest expense of $10,250, giving a times-interest-earned ratio of 20.5 times ($210,000/$10,250 = 20.5).

The Following Information Relates to Belcher Unlimited for the Past