Last year, Hadley Bakery's statement of income reported the following: net income, $325,600; interest expense, $81,400; and income tax expense, $113,960.The company's times interest earned ratio is
A)5.0 times.
B)6.4 times.
C)4.0 times.
D)4.6 times.

Question

Quizplus · Accepted Answer

The times interest earned ratio is calculated as (Net Income + Interest Expense + Income Tax Expense) / Interest Expense. Plugging in the given values: ($325,600 + $81,400 + $113,960) / $81,400 = $521,960 / $81,400 = 6.4 times.

Last Year, Hadley Bakery's Statement of Income Reported the Following