In the Past Year, TVG Had Revenues of $3 Million

question 73

Multiple Choice

In the past year, TVG had revenues of $3 million, cost of goods sold of $2.5 million, and depreciation expense of $200,000.The firm has a single issue of debt outstanding with a face value of $1 million, market value of $.92 million, and a coupon rate of 8%.What is the firm's times interest earned ratio? (Use value in dollars)

• A)3.75
• B)2.98
• C)2.80
• D)3.40

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Definitions:

Basis

The amount of investment in property for tax purposes, used to calculate the gain or loss on the sale, exchange, or disposition of property.

Corporation

A legal entity owned by shareholders with rights and liabilities separate from those of its owners, and which pays taxes on earnings.

Fiscal Year-End

Fiscal Year-End refers to the last day of a company's accounting period, which is used for financial reporting and tax purposes and can vary but often ends on December 31.

Accrual Basis

An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when the cash transaction occurs.