Frank's Boat Shop,Inc.reports net income of $63,000,income before taxes of $90,000 and interest expense of $18,000.The weighted-average number of shares of common stock outstanding during the year was 30,000 shares.What is the times-interest-earned ratio?

Question

Quizplus · Accepted Answer

To calculate the times-interest-earned ratio, we need to divide the income before taxes by the interest expense. 
Times-interest-earned ratio = Income before taxes/Interest expense 
= $90,000/$18,000 
= 5

Therefore, the answer is C, and the times-interest-earned ratio is 5.