A business reports the following in its financial statements:
Revenues $1 800
Preference Dividend 400
Expenses 600
Assets 1 900
Liabilities 1 100
What is the times dividends earned ratio?
A) 4.50 times
B) 2.25 times
C) 1.80 times
D) 3.00 times

Question

Quizplus · Accepted Answer

The times dividends earned ratio is calculated as (Revenues - Expenses) / Preference Dividend. Here, it is ($1,800 - $600) / $400 = $1,200 / $400 = 3.00 times.

A Business Reports the Following in Its Financial Statements