The correct times interest earned computation is:
A)(Net income + Interest expense + Income taxes)/Interest expense.
B)(Net income + Interest expense - Income taxes)/Interest expense.
C)(Net income - Interest expense - Income taxes)/Interest expense.
D)(Net income - Interest expense + Income taxes)/Interest expense.
E)Interest expense/(Net income + Interest expense + Income taxes expense).

Question

Quizplus · Accepted Answer

The correct formula for times interest earned is (Net income + Interest expense + Income taxes)/Interest expense. This formula helps to determine a company's ability to pay its interest expenses using its earnings before taxes are deducted.

The Correct Times Interest Earned Computation Is