The Income Statement for Otto Construction Company Appear Below

question 44

Multiple Choice

The income statement for Otto Construction Company appear below: Average total assets total $240,000.Otto's income tax rate is 25%.
What is the times interest earned ratio?

• A)2.38
• B)3.13
• C)3.16
• D)4.17

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Definitions:

Entitlement

A right or benefit guaranteed by law or contract, especially in the context of social welfare or employee benefits.

Qualified Retirement

A retirement plan that meets requirements set forth by the IRS that allows for tax benefits for the employer and employee.

Strict Tax Regulations

Rigorous laws and rules governing the assessment and collection of taxes from individuals and businesses.

Favorable Tax Treatment

Favorable Tax Treatment involves tax policies that are advantageous to businesses or individuals, reducing the amount of taxes owed.