Calculate the Times Interest Earned Ratio Using the Following Information

question 30

Multiple Choice

Calculate the times interest earned ratio using the following information. Sales = $1.5 million, cost of goods sold = $800,000, depreciation expense = $100,000, addition to retained earnings = $85,000, dividends per share = $1.2, tax rate = 30%, and number of shares of common stock outstanding = 100,000. Assume the firm has no preferred stock.

• A) 2.25 times
• B) 1.25 times
• C) 1.95 times
• D) 2.75 times

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Definitions:

Relative Height

A cue in visual perception that allows individuals to judge distance based on the apparent height of objects in the field of view.

Field of Vision

The entire area that a person can see without moving their eyes or head.

Shape Constancy

The perceptual phenomenon where the perceived shape of an object remains constant despite changes in the viewing angle or distance.

Trapezoidal Image

An image or figure that has the shape of a trapezoid, which is a quadrilateral with at least one pair of parallel sides.