Sheehan, Inc provides the following income statement for 2017
Net Sales $240,000
Cost of Goods Sold 110,000
Gross Profit $130,000
Operating Expenses:
Selling Expenses 45,000
Administrative Expenses 12,000
Total Operating Expenses 57,000
Operating Income $73,000
Other Revenues and (Expenses):
Loss on Sale of Capital Assets (27,000 )
Interest Expense (1,000 )
Total Other Revenues and (Expenses) (28,000 )
Income Before Income Taxes $45,000
Income Tax Expense 5,300
Net Income $39,700
Calculate the times-interest-earned ratio. (Round your answer to two decimal places.)
A) 73.00 times
B) 45.00 times
C) 39.70 times
D) 46.00 times
D .D)
Times-interest-earned ratio = (Net income + Income tax expense + Interest expense) / Interest expense = ($39,700 + 5,300 + 1,000 ) / 1,000 = 46.00 times
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