Question

In a recent year Bonita Industries had net income of $130000, interest expense of $50000, and income tax expense of $21000. What was Bonita Industries’s times interest earned for the year? a. 2.60 b. 4.02 c. 3.60 d. 3.02

Answer 1

Answer:

b. 4.02

Explanation:

Time interest earned is actually tells us how many times it's interest is the company earning so that formula for times interest earned is

Earnings before income and tax/Interest expense.

So we have to add interest expense and tax expense back to net income.

130,000+50,000+21,000=201,000

201,000/50,000=4.02