Calculate C Co's times interest earned ratio for 2012 and 2011 respectively.
A)11.82 and 17.93
B)7.21 and 12.75
C)12.33 and 19.77
D)11.33 and 18.77

Question

Quizplus · Accepted Answer

To calculate times interest earned ratio, we use the formula:
Times Interest Earned Ratio = (Profit before interest and tax) / Interest expense

For 2012:
Profit before interest and tax = 224,000
Interest expense = 18,142
Times Interest Earned Ratio = 224,000 / 18,142 = 12.33

For 2011:
Profit before interest and tax = 198,000
Interest expense = 9,909
Times Interest Earned Ratio = 198,000 / 9,909 = 19.77

Therefore, the answer is (C) 12.33 and 19.77

Calculate C Co's Times Interest Earned Ratio for 2012 and 2011