The information related to interest expense of Classic Music, Inc. is given below: $$\begin{array} { | l | r | }
\hline \text { Net income } & \$ 264,000 \
\hline \text { Income tax expense } & 107,000 \
\hline \text { Interest expense } & 66,000 \
\hline
\end{array}$$ Based on the above data, which of the following is the times-interest-earned ratio? (Round the final answer to two decimal places.)
A) 4.08 times
B) 4 times
C) 6.62 times
D) 5 times

Question

The information related to interest expense of Classic Music, Inc. is given below: $$\begin{array} { | l | r | } 
\hline \text { Net income } & \$ 264,000 \
\hline \text { Income tax expense } & 107,000 \
\hline \text { Interest expense } & 66,000 \
\hline
\end{array}$$ Based on the above data, which of the following is the times-interest-earned ratio? (Round the final answer to two decimal places.)
A) 4.08 times
B) 4 times
C) 6.62 times
D) 5 times

Quizplus · Accepted Answer

Times-interest-earned ratio = Earnings before interest and taxes (EBIT) / Interest expense
= $70,000 / $10,575
= 6.62 times (rounded to two decimal places)

The Information Related to Interest Expense of Classic Music, Inc