Selected financial data for Company B is provided below: What is the times interest earned ratio for Company B?
$$\begin{array} { | l | r | }
\hline \text { ( in milions) } & \text { Compamy B } \
\hline \text { Sales } & \$ 47,220 \
\hline \text { Interest expense } & 287 \
\hline \text { Tax expense } & 1,042 \
\hline \text { Net income } & \$ 1,783 \
\hline
\end{array}$$

Question

Selected financial data for Company B is provided below: What is the times interest earned ratio for Company B?
$$\begin{array} { | l | r | } 
\hline \text { ( in milions) } & \text { Compamy B } \
\hline \text { Sales } & \$ 47,220 \
\hline \text { Interest expense } & 287 \
\hline \text { Tax expense } & 1,042 \
\hline \text { Net income } & \$ 1,783 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The times interest earned ratio is calculated as (Earnings Before Interest and Taxes (EBIT)) / (Interest Expense). To find EBIT, we add back Interest Expense and Tax Expense to Net Income: $1,783m + $287m + $1,042m = $3,112m. Then, divide by Interest Expense: $3,112m / $287m = 10.8 times.

Selected Financial Data for Company B Is Provided Below: What