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White raven [17]
3 years ago
12

Balance sheet and income statement data indicate the following:

Business
1 answer:
QveST [7]3 years ago
4 0

Answer:

the times interest earned ratio is 5.87 times

Explanation:

The computation of the times interest earned ratio is shown below:

Interest expense is

= Bonds payable × Interest rate

= $1,106,989 × 6%

= $66,419

Now

Times interest earned ratio is

= (Income before income tax for year + Interest expense) ÷ Interest expense

= ($323,108 + $66,419) ÷ ($66,419)

= 5.87 times

Hence, the times interest earned ratio is 5.87 times

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