Auto Industries Company Reported the Following on Its Income Statement

question 163

Multiple Choice

Auto Industries Company reported the following on its income statement: If the income statement also shows interest expense equal to $80,000, what is the company's times interest earned
Ratio?

• A) 5 times
• B) 8 times
• C) 5.25 times
• D) 6.25 times

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Definitions:

Opportunity Cost

Represents the benefits an individual, investor, or business misses out on when choosing one alternative over another.

Tractor

A powerful vehicle designed primarily for agricultural use, to pull farm machinery and plough agricultural land.

Motorcycle

A two-wheeled motorized vehicle, widely used for both transportation and recreation.

Comparative Advantage

A principle that states a country should produce and export goods for which it has a lower opportunity cost compared to other countries.