A company had fixed interest expense of $6,000, its income before interest expense and any income taxes is $18,000, and its net income is $8,400. The company's times interest earned ratio equals:
A) 0.33.
B) 0.71.
C) 1.40.
D) 3.00.
E) 12,000.

Question

Quizplus · Accepted Answer

Times interest earned ratio = (Income before interest and taxes)/Interest expense

Using the given information, we can calculate the times interest earned ratio as:

Times interest earned ratio = (18,000)/(6,000) = 3.00

Therefore, the answer is (D) 3.00.

A Company Had Fixed Interest Expense of $6,000, Its Income