Terra Company reported income before taxes of $90,000. The company is in a 30% income tax bracket. Also, Terra's income statement contained a charge for interest expense amounting to $30,000. Based on this information alone, the company's times interest ratio would be:

Question

Quizplus · Accepted Answer

$90,000 income before taxes + $30,000 interest expense = $120,000 EBIT; $120,000/$30,000 = 4.0 times interest earned ratio

Terra Company Reported Income Before Taxes of $90,000