Selected financial data for Company B is provided below: What is the times interest earned ratio for Company B?
A)6.2 times.
B)10.8 times.
C)0.2 times.
D)164.5 times.

Question

Selected financial data for Company B is provided below:  What is the times interest earned ratio for Company B?
A)6.2 times. 
B)10.8 times. 
C)0.2 times. 
D)164.5 times.

Quizplus · Accepted Answer

To calculate the times interest earned ratio, we use the formula: 
Times Interest Earned Ratio = Earnings Before Interest and Taxes (EBIT) / Interest Expense 
From the financial data provided, we can see that EBIT is $166,000 and Interest Expense is $15,370. 
So, the Times Interest Earned Ratio for Company B is: 
166,000 / 15,370 = 10.8 times. 
Therefore, the correct answer is B.

Selected Financial Data for Company B Is Provided Below