A company's fixed interest expense is $8,000, its income before interest expense and income taxes is $32,000. Its net income is $9,600. The company's times interest earned ratio equals:
A) 0.25.
B) 0.30.
C) 0.83.
D) 3.33.
E) 4.0.
E) 4.0.
Explanation: Times Interest Earned Ratio = Income before Interest Expense and Income
Taxes/Interest Expense
Times Interest Earned Ratio = $32,000/$8,000 = 4.0
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