Balance sheet and income statement data indicate the following: Based on the data presented,what is the times interest earned ratio? (Round to one decimal point.)
A)1.5
B)6.4
C)6.5
D)5.5

Question

Balance sheet and income statement data indicate the following:​  Based on the data presented,what is the times interest earned ratio? (Round to one decimal point.)
A)1.5 
B)6.4 
C)6.5 
D)5.5

Quizplus · Accepted Answer

To calculate the times interest earned ratio, we need to divide the earnings before interest and taxes (EBIT) by the interest expense.

EBIT = $139,000

Interest expense = $21,385

Times interest earned ratio = EBIT / Interest expense 
= $139,000 / $21,385 
= 6.5

Therefore, the answer is (C) 6.5.

Balance Sheet and Income Statement Data Indicate the Following:​

Balance Sheet and Income Statement Data Indicate the Following: