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Mnenie [13.5K]
3 years ago
14

Auto Industries Company reported the following on its income statement:

Business
1 answer:
AleksandrR [38]3 years ago
7 0

Answer:

Option c. 5.25 times is the correct answer.

Explanation:

Below is the calculation:

Income before income tax = $420000

Income tax expenses = 120000 dollars

Net income = $300000

Interest expense = $80000

Interest earned ratio = Earning Before Interest and Taxes / Interest Expenses

Interest earned ratio = 420000 / 80000

Interest earned ratio = 5.25 times

Option c. 5.25 times is the correct answer.

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