A company's interest expense is $15,000. Its income before interest expense and income taxes is $86,250. Its net income is $31,900. The company's times interest earned ratio equals:

a. 0.47.
b. 5.75.
c. 0.37.
d. 0.17.
e. 2.70.

b. 5.75.

Explanation:

The times interest earned is the number of times the net income or earnings before interest and taxes can be used to settle the interest expense of an entity.

It is given as the ratio of the earnings before interest and taxes to the interest accrued.

Given that

Interest expense = $15,000

Income before interest expense and income taxes = $86,250

The company's times interest earned ratio

= $86,250/$15,000

= 5.75

It means that the company's earnings before interest and taxes can settle the interest expense 5.75 times.

answer; possession utility;

watch how they communicate and watch how they handle their free time

hope it !