A company's interest expense is $9,000. Its income before interest expense and income taxes is $38,250. Its net income is $11,850. The company's times interest earned ratio equals:

(A) 0.235.
(B) 0.76.
(C) 3.23.
(D) 4.25.
(E) 0.31.

The company's times interest earned ratio is a financial measure given as the earnings before interest and taxes (EBIT) divided by the total interest payable on debts.

Times interest earned = net income before interest and tax/ Interest payable

= $38,250/$9,000

= 4.25

This means that the company's earnings before interest and taxes can settle its interest 4.25 times.

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A company's interest expense is $9,000. Its income before interest expense and income taxes is $38,250. Its net income is $11,850. The company's times interest earned ratio equals: (A) 0.235. (B) 0.76. (C) 3.23. (D) 4.25. (E) 0.31.

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A company's interest expense is $9,000. Its income before interest expense and income taxes is $38,250. Its net income is $11,850. The company's times interest earned ratio equals:

(A) 0.235.
(B) 0.76.
(C) 3.23.
(D) 4.25.
(E) 0.31.