Pia Corporation has provided the following data from its most recent income statement:

$\begin{array}{l}
\text { Net operating income}&\$ 71,000 \
\text {Interest expense.. }&\$ 34,000 \
\text {Net income before taxes. }&\$ 37,000 \
\text {Income taxes }&\$ 11,000 \
\text {Net income }&\$ 26,000
\end{array}$

The times interest earned ratio is closest to:
A)2.09
B)1.09
C)0.76
D)2.98

Question

Pia Corporation has provided the following data from its most recent income statement:

$\begin{array}{l}
\text { Net operating income}&\$ 71,000 \
\text {Interest expense.. }&\$ 34,000 \
\text {Net income before taxes. }&\$ 37,000 \
\text {Income taxes }&\$ 11,000 \
\text {Net income }&\$ 26,000
\end{array}$

The times interest earned ratio is closest to:
A)2.09
B)1.09
C)0.76
D)2.98

Quizplus · Accepted Answer

The times interest earned ratio is calculated by dividing net income before taxes by interest expense. In this case, the times interest earned ratio is $37,000 / $34,000 = 2.09.

Pia Corporation Has Provided the Following Data from Its Most