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24 October, 07:58

Standard inc. has an annual interest expense of $40,000. if standard's times-interest-earned ratio is 3.0, what is standard's earnings before taxes (ebt) ? select one:

a. $160,000

b. $80,000

c. $47,000

d. $120,000

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Answers (1)
  1. 24 October, 08:27
    0
    Hello!

    Time interest earned ratio=income before tax and interest expenses:interest expenses

    3=X:40000

    Solve for x

    X=3*40000

    X=120000 This is income before tax and interest expenses but we need to figure out earning before tax only as required so

    Earning before tax=120,000-40,000

    =80,000. Answer

    Good luck!
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