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Sloan [31]
3 years ago
5

A company reports the following: Income before income tax $387,520 Interest expense 69,200 Determine the times interest earned.

Round your answer to one decimal place.
Business
1 answer:
katen-ka-za [31]3 years ago
8 0

Answer:

6.6

Explanation:

The formula and the computation of the times interest earned is shown below:

Times earned interest = (Earnings before income tax and interest expense) ÷ (Interest expense)

where,

Earnings before income tax and interest expense is

= $387,520 + $69,200

= $456720

And, the interest expense is $69,200

So, the times interest earned ratio is

= $456,720 ÷ $69,200

= 6.6

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