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:

Factual Information

Data or details based on real occurrences or established facts that can be verified through evidence or observation.

Prospective Memory

Involves remembering to perform a planned action or recall a planned intention at some future point in time.

Testing Effect

The enhanced memory retention and recall ability resulting from testing oneself on learned material, as opposed to simply studying or reviewing it.

Enriched Encoding

A memory enhancement technique that involves adding additional context or meaning to information to aid in its retrieval.