QUESTION 4 Last year Jar Company had a net income of 290000

QUESTION 4 Last year Jar Company had a net income of $290.000, income tax expense of $66,000, and interest exponse of $20,000. The company\'s times interest earned was closest to ? 1020 O14.50 ? 1550 ? 1880

Solution

Times interest earned ratio=Earnings before interest and taxes/interest expense

(376000/20000)

=18.80

Earnings before interest and taxes(balance)($356000+$20000)	$376000
Less:interest expense	(20000)
Earnings before taxes(290000+66000)	$356000
Less:income tax expense	(66000)
Net income	$290000