Question

For the FY 2018, Frederick Company had net sales of $1,100,000 and net income of $70,000,...

For the FY 2018, Frederick Company had net sales of $1,100,000 and net income of $70,000, paid income taxes of $27,500, and had before tax interest expense of $17,500. Use this information to determine the Times Interest Earned Ratio. (Round your answers to one decimal place)

Homework Answers

Answer #1

Times Interest Earned = Earnings before interest and tax / Interest expense

= (70,000 + 27,500 + 17,500) / 17,500 = 115,000 / 17,500 = 6.57 times

Net Income          70,000
Tax Expense          27,500
Earning before tax          97,500
Interest Expense          17,500
Earning before interest and tax        115,000
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