A company's had fixed interest expense of $5,000, its income before interest expense and income taxes is $17,000, and its net income is $9,400. The company's times interest earned ratio equals:
A) 3.4.
B) 1.8.
C) 0.5.
D) 1.9.
E) 0.3.

Question

Quizplus · Accepted Answer

The times interest earned ratio is calculated as income before interest and taxes divided by interest expense. Here, it is $17,000 / $5,000 = 3.4.

A Company's Had Fixed Interest Expense of $5,000, Its Income