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.

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

Business

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