Grogan Inc. Grogan Inc. had the following information available from its 2011 and 2012 financial statements:
Refer to the Grogan Inc. information above. Grogan's times-interest-earned ratio for 2012 is: (round to two decimal places)

Question

Grogan Inc. Grogan Inc. had the following information available from its 2011 and 2012 financial statements:
 Refer to the Grogan Inc. information above. Grogan's times-interest-earned ratio for 2012 is: (round to two decimal places)

Quizplus · Accepted Answer

The times-interest-earned ratio can be calculated as (income before interest and taxes / interest expenses).

For 2012: 
Income before interest and taxes = $710,000 
Interest expenses = $40,571

Times-interest-earned ratio = 710,000 / 40,571 = 17.50 (rounded to two decimal places)

Therefore, the correct answer is C.