Question

Ajax Corp's sales last year were $460,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times-interest-earned (TIE) ratio? Group of answer choices

Answer 1

Answer:

the times interest ratio is 7.80

Explanation:

The computation of the times-interest earned ratio is shown below:

As we know that

Times-interest-earned (TIE) ratio is

= Earnings Before Interest and Taxes ( EBIT) ÷ Interest expense

= ($460,000 - $362,500) ÷ $12,500

= 7.80

Hence, the times interest ratio is 7.80

We simply applied the above formula so that the correct value could come

And, the same is to be considered