Below is selected information from Marker's 2012 financial statements:
- Marker's 2012 Interest Coverage ratio is
A) 7.66
B) 1.00
C) 11.35
D) 4.35

Question

Below is selected information from Marker's 2012 financial statements: 
- Marker's 2012 Interest Coverage ratio is
A) 7.66 
B) 1.00 
C) 11.35 
D) 4.35

Quizplus · Accepted Answer

The Interest Coverage Ratio is calculated as Earnings Before Interest and Taxes (EBIT) divided by Interest Expense. Looking at the financial statements, Marker's EBIT for 2012 was $13,626 and the Interest Expense was $1,200. Therefore, the Interest Coverage Ratio would be 13,626/1,200 = 11.35. Option C is the closest choice to this value.

Below Is Selected Information from Marker's 2012 Financial Statements