Lucas Company has provided the following information:
• Cash flow from operating activities,$360,000
• Net income,$306,000
• Interest expense,$30,000
• Interest cash payments,$20,000
• Income tax payments,$240,000
• Income tax expense,$246,000
-
What was Lucas' times interest earned ratio?
A)18.9
B)19.4
C)28.3
D)31.0

Question

Lucas Company has provided the following information: 
• Cash flow from operating activities,$360,000
• Net income,$306,000
• Interest expense,$30,000
• Interest cash payments,$20,000
• Income tax payments,$240,000
• Income tax expense,$246,000
-
What was Lucas' times interest earned ratio?
A)18.9
B)19.4
C)28.3
D)31.0

Quizplus · Accepted Answer

Times interest earned = (Net income + Interest expense + Income tax expense)/Interest expense
= (306,000 + 30,000 + 246,000)/30,000
= 19.4

Lucas Company Has Provided the Following Information