A Business Reports the Following in Its Financial Statements $$\begin{array} { l r } \text { Net profit before tax } & \$ 100 \\\text { Interest expense } & 20 \\\text { Income tax expense } & 30\end{array}$$

question 16

Multiple Choice

A business reports the following in its financial statements:
$$\begin{array} { l r } \text { Net profit before tax } & \$ 100 \\\text { Interest expense } & 20 \\\text { Income tax expense } & 30\end{array}$$ Its 'times interest earned' ratio is:

• A) 6.0 times
• B) 5.0 times
• C) 3.5 times
• D) 4.0 times

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Definitions:

Apparent Authority

The appearance or assumption of authority based on the actions or words of the principal, which a third party reasonably believes the agent has.

Implied Authority

Authority of an agent that is not expressly granted but rather implied by the actions, situation, or responsibilities given to the agent.

Implied Ratification

The act of accepting or endorsing a previously unauthorized action or agreement through behavior that implies approval, rather than through explicit consent.

Agent's Act

Refers to actions taken by an agent on behalf of a principal, where the agent has the authority to affect the principal's legal position.