The formula for times interest earned is:
A) Net income + Interest expense + Income taxes divided by Interest expense.
B) Net income + Interest expense - Income taxes divided by Interest expense.
C) Net income - Interest expense - Income taxes divided by Interest expense.
D) Net income - Interest expense + Income taxes divided by Interest expense.
E) Interest expense divided by Net income + Interest expense + Income taxes expensE.

Question

Quizplus · Accepted Answer

The times interest earned formula is calculated by taking the net income, adding the interest expense and income taxes, and then dividing that sum by the interest expense. This equation is expressed as (Net Income + Interest Expense + Income Taxes) / Interest Expense.

The Formula for Times Interest Earned Is