If a company had income before interest and taxes in the amount of $2,345,540 and a times interest earned ratio of 5.2,what is the total amount of the company's interest expense?
A)$451,065
B)$320,185
C)$121,968
D)$275,840
E)$230,000

Question

Quizplus · Accepted Answer

To find the total interest expense, we need to use the formula for times interest earned ratio:

Times Interest Earned Ratio = (Income Before Interest and Taxes) / (Total Interest Expense)

We know the income before interest and taxes is $2,345,540 and the times interest earned ratio is 5.2.

5.2 = 2,345,540 / Total Interest Expense

Total Interest Expense = 2,345,540 / 5.2

Total Interest Expense = $451,065

Therefore, the answer is choice A.

If a Company Had Income Before Interest and Taxes in the Amount