Answer :
The times interest earned ratio for Company A is 6.89. The Option a.
How to get the times interest earned ratio
Times Interest Earned Ratio = (Net Income + Interest Expense + Tax Expense) / Interest Expense
= ($2,620 + $676 + $1,362) / $676
= $4,658 / $676
= 6.89
= 6.9
With times interest earned ratio for Company A of 6.89, this indicates that the company's earnings are 6.89 times its interest expenses and hows its ability to cover its interest obligations comfortably.
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Full question:
. Selected financial data for Company A is provided below: (S in millions) Company A Sales $66,176 Interest expense 676 Tax expense 1,362 Net income $2,620 What is the times interest earned ratio for Company A? a. 6.9 times. b. 3.9 times. c. 0.3 times. d. 97.9 times.
