The information related to interest expense of Stereo Music, Inc. is given below
Net income $264,000
Income tax expense 107,000
Interest expense 66,000
Based on the above data, which of the following is the times-interest-earned ratio?
A) 4.08 times
B) 4 times
C) 6.62 times
D) 5 times
C .Times-interest-earned ratio = EBIT / Interest Expense
EBIT = Net Income + Income Tax Expense + Interest Expense
EBIT = $264,000 + $107,000 + $66,000
EBIT = $437,000
Interest Coverage Ratio = $437,000 / $66,000 = 6.62 times.
You might also like to view...
Why are managers more likely to achieve their objectives in both the short term and the long term when they utilize a tool such as the balanced scorecard?
The ________ rule states that acceptance is effective when it is dispatched, even if it is lost in transmission.
A. silence-as-acceptance B. mirror image C. mailbox D. mutual assent
Specialty retailing is a form of selling by description in that buyers usually do not see the actual product until it arrives.
Answer the following statement true (T) or false (F)
Abilities can be modified over time, unlike skills, which remain stable over one's lifetime.
Answer the following statement true (T) or false (F)