Last year, Nickel Company had a net income of $150,000, income tax expense of $30,000, and interest expense of $20,000.The company's times-interest-earned ratio was closest to:

Question

Quizplus · Accepted Answer

Times-Interest-Earned Ratio = (Income Before Taxes + Interest Expense) / Interest Expense
=  (Net income + Income tax expense + Interest expense) / Interest expense
= ($150,000 + $30,000 + $20,000) / $20,000
= 10 times

Last Year, Nickel Company Had a Net Income of $150,000