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11.Calculating the Times-Interest-Earned Ratio Mauka, Inc. provided the following income statement for last year: Sales $24,350,735 Cost of goods sold 15,300,000 Gross margin $9,050,735 Operating expenses 4,910,685 Operating income $4,140,050 Interest expense 475,015 Income before taxes $3,665,035 Income taxes 1,461,214 Net income $2,203,821 Required: Calculate the times-interest-earned ratio. Round the answer to one decimal place. times
Expert Answer
Answer: Times interest earned ratio: 8.7 times
Times interest earned ratio = Operating Income ( EBIT) / Interest Expense = $ 4,140,050 / $ 475,015 = 8.7 times.
