question archive For the FY 2018, Frederick Company had net sales of $800,000 and net income of $70,000, paid income taxes of $15,000, and had before tax interest expense of $20,000
For the FY 2018, Frederick Company had net sales of $800,000 and net income of $70,000, paid income taxes of $15,000, and had before tax interest expense of $20,000
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For the FY 2018, Frederick Company had net sales of $800,000 and net income of $70,000, paid income taxes of $15,000, and had before tax interest expense of $20,000. Use this information to determine the Times Interest Earned Ratio. (Round your answers to one decimal place)
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Answer :-
Times Interest Earned Ratio = Earning before Interest & Tax/Interest Expense
= 105,000/20,000 = 5.25
Earning Before Interest & Tax = Net Income + Income Tax + Tax Interest Expense
= 70,000 + 15,000 + 20,000
= $105,000
