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23 January, 15:43

Town Company reported the following on its income statement:Income before income taxes $750,000Income tax expense 150,000Net income $600,000An analysis of the income statement revealed that interest expense was $100,000. Town Company's times interest earned wasA. 7.5 times. B. 5 times. C. 6 times. D. 8.5 times.

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  1. 23 January, 15:58
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    D. 8.5 times

    Explanation:

    The interest earned ratio = EBIT / interest

    EBIT=750000+100000=850000

    The Interest earned ratio = 850000/100000 = 8.5 times

    The correct answer is D. 8.5 times.
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