Calculate the Times Interest Earned Ratio Given the Following Information

question 37

Multiple Choice

Calculate the times interest earned ratio given the following information: depreciation expense = $6,000; EBIT = $90,000; cash coverage ratio = 8 times.

• A) 8.0 times
• B) 7.5 times
• C) 7.0 times
• D) 6.5 times
• E) 6.0 times

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Definitions:

Cash Dividends

Profits paid out to shareholders by a corporation in the form of cash.

Retain Earnings

Profits that a company chooses not to pay out as dividends but instead reinvests in the business or keeps as a reserve for specific objectives.

Shareholders

Individuals or entities that own shares in a corporation, giving them ownership interest and usually voting rights in the company.

Legal Case

A dispute between opposing parties resolved in a court of law.