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An analysis of the income statement revealed that interest expense was $100000. Waterway Company's times interest earned was

Sagot :

Parrain

Answer: 8.3

Explanation:

The times interest earned is used to estimate the ability of a company to pay its debt payments using income from operations.

It is calculated by the formula:

= Earnings before interest and tax / Interest expense

Earnings before interest and tax:

= Earnings before tax + Interest expense

= 730,000 + 100,000

= $830,000

Times interest earned:

= 830,000 / 100,000

= 8.3

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