Calculate the Times Interest Earned Ratio Using the Following Information

question 133

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 percent, 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:

Secondary Labour Market

A segment of the job market characterized by low-paying, insecure, non-unionized, and often part-time or temporary work, frequently contrasted with more stable and better-compensated primary employment.

Globalization

The process by which businesses or other organizations develop international influence or start operating on an international scale, often leading to the interconnectedness of world economies and cultures.

Corporations

Legal entities that are distinct from their owners, providing them with limited liability, and are created to conduct business.

Oligopoly

A market structure in which a few firms dominate the industry, leading to limited competition and potentially higher prices for consumers.