Last year, Copper Company had a net income of $500,000, income tax expense of $60,000, and interest expense of $40,000.The company's times-interest-earned ratio was closest to:
A) 10 times.
B) 22 times.
C) 15 times.
D) 30 times.

Question

Quizplus · Accepted Answer

Times-Interest-Earned Ratio = (Income Before Taxes + Interest Expense) / Interest Expense 
= (Net income + Tax expense + Interest expense) / Interest expense 
= ($500,000 + $60,000 + $40,000) / $40,000
= 15 times

Last Year, Copper Company Had a Net Income of $500,000