Company X has net sales revenue of $436,000,cost of goods sold of $343,000,and all other expenses of $90,000.If interest expense is $10,000 and income tax expense is $1,000,the times interest earned ratio is closest to
A)1.4.
B).33.
C)1.3.
D).40.

Question

Quizplus · Accepted Answer

The times interest earned ratio is calculated as (Net Income + Interest Expense + Tax Expense) / Interest Expense. Here, Net Income = $436,000 - $343,000 - $90,000 = $3,000. So, ($3,000 + $10,000 + $1,000) / $10,000 = 1.4.

Company X Has Net Sales Revenue of $436,000,cost of Goods