Question

Ron Landscaping's income statement reports net income of $76,700, which includes deductions for interest expense of $12,600 and income taxes of $36,300. Its times interest earned is:

Answer 1

Its time's interest earned is = 9.968 Times.

What is times interest?

The ability of a business to make debt payments on time is gauged by the interest coverage ratio or times interest collected. EBIT or EBITDA divided by the total interest expense might be used to determine it.

Times interest = $\frac{Earnings before Interest and Tax}{Interest}$

Earnings before Interest and tax = Net Income + Interest + Tax

Earnings before Interest and tax = 76,700 ₊ 12,600 ₊ 36300

Earnings before Interest and tax = $1,25,600

therefore,Times intererst =  $\frac{Earnings before Interest and Tax}{Interest}$

Times interest = $\frac{1,25,600}{12,600}$

Times interest = 9.968 Times.

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