For the most recent year,Wilson Enterprises had sales of $689,000,cost of goods sold of $470,300,depreciation expense of $61,200,and additions to retained earnings of $48,560.The firm currently has 12,000 shares of common stock outstanding,and the previous year's dividends per share were $1.18.Assuming a 35 percent tax rate,what was the times interest earned ratio?
A)1.47
B)2.09
C)2.58
D)3.15
E)3.67

Question

Quizplus · Accepted Answer

Net income = $48,560 + ($1.18 × 12,000) = $62,720; Earnings before taxes = [$62,720/(1 - 0.35)] = $96,492.31; Earnings before interest and taxes = $689,000 - $470,300 - $61,200 = $157,500; Interest = $157,500 - $96,492.31 = $61,007.69; Times interest earned = $157,500/$61,007.69 = 2.58

For the Most Recent Year,Wilson Enterprises Had Sales of $689,000,cost