Babbitt Corporation has provided the following data from its most recent income statement: Net operating income$94,000 Interest expense$62,000 Net income before taxes$32,000 Income taxes$10,000 Net income$22,000 Required:Compute the times interest earned ratio. Show your work!
What will be an ideal response?
Times interest earned ratio = Earnings before interest expense and income taxes ÷ Interest expense
= $94,000 ÷ $62,000 = 1.52
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What will be an ideal response?