A Firm Has Net Income of $6,850 and Interest Expense

question 103

Multiple Choice

A firm has net income of $6,850 and interest expense of $2,130.The tax rate is 34 percent.What is the firm's times interest earned ratio?

• A)3.22
• B)5.19
• C)5.38
• D)5.87
• E)6.33

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Definitions:

Operating Cash Flow

An assessment of the cash income resulting from a company's standard operational processes.

Millions

A numerical term representing one thousand thousands, or 1,000,000.

Common Stock

A type of equity security that represents ownership in a corporation, with rights to vote on corporate matters and receive dividends.

Net Income

The conclusive financial profit of a company after subtracting expenses and tax payments from its revenue stream.