Balance sheet and income statement data indicate the following: Based on the data presented above, what is the number of times bond interest charges were earned (round to one decimal point)?
A) 3.7
B) 4.4
C) 4.5
D) 3.5

Question

Balance sheet and income statement data indicate the following:  Based on the data presented above, what is the number of times bond interest charges were earned (round to one decimal point)?
A) 3.7 
B) 4.4 
C) 4.5 
D) 3.5

Quizplus · Accepted Answer

To calculate the times interest earned ratio, we need to divide the earnings before interest and taxes (EBIT) by the bond interest charges. In this case, EBIT is $8,500 and bond interest charges are $1,889. Therefore, the times interest earned ratio is $8,500/$1,889 = 4.5.

Balance Sheet and Income Statement Data Indicate the Following