Maryland Inc. provides the following income statement for the year 2015: 2015 Ne
ID: 2452945 • Letter: M
Question
Maryland Inc. provides the following income statement for the year 2015: 2015 Net Sales $240,000 Cost of Goods Sold 110,000 Gross Profit $130,000 Operating Expenses: Selling Expenses 45,000 Administrative expenses 12,000 Total Expenses 57,000 Operating Income $73,000 Other Revenues and (Expenses): Loss on sale of capital assets (23,000) Interest Expense (1,000) Total Other Revenues and (Expenses) (24,000) Income Before Taxes $49,000 Income Tax Expense 5,000 Net Income $44,000 Calculate the times-interest-earned ratio. A) 25 times B) 30 times C) 45 times D) 50 times
Explanation / Answer
solution EBT 49,000 ADD : INTEREST EXPENSE 1,000 EBIT 50,000 times-interest-earned ratio = EBIT/INTEREST 50 times 50000/1000