The Times Interest Earned Computation Is

question 17

Multiple Choice

The times interest earned computation is:

• A) (Net income + Interest expense + Income taxes)/Interest expense.
• B) (Net income + Interest expense - Income taxes)/Interest expense.
• C) (Net income - Interest expense - Income taxes)/Interest expense.
• D) (Net income - Interest expense + Income taxes)/Interest expense.
• E) Interest expense/(Net income + Interest expense + Income taxes expense).

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Definitions:

Schedule M-1

is a tax form used by corporations to reconcile income reported on tax returns with income reported on financial statements.

Alternative Minimum Tax

A parallel tax system to the regular income tax that ensures that certain taxpayers pay at least a minimum amount of tax.

Corporations

Legal entities that are separate from their owners, capable of owning property, entering contracts, and being taxed.

Subject

A broad term typically referring to the main topic or person being discussed or studied.