MARNI COMPANY
Balance Sheet
As of December 31
ASSETS
Cash	$	50,000
Accounts receivable		100,000
Inventory		200,000
Net plant and equipment		650,000
Total assets	$	1,000,000
LIABILITIES AND STOCKHOLDERS EQUITY
Accounts payable	$	100,000
Accrued expenses		90,000
Long-term debt		250,000
Common stock		100,000
Paid-in capital		50,000
Retained earnings		410,000
Total liabilities and stockholders equity	$	1,000,000

MARNI COMPANY
Income Statement
For the year ended December 31
Sales (all on credit)	$	2,000,000
Cost of goods sold		1,750,000
Gross profit	$	250,000
Sales and administrative expenses		30,000
Fixed lease expenses		10,000
Depreciation		60,000
Operating profit	$	150,000
Interest expense		25,000
Profit before taxes	$	125,000
Taxes (40%)		50,000
Net income	$	75,000

Refer to the tables above. Times interest earned for Marni Company is ____.

Multiple Choice

• 3x

• 5x

• 80x

• 6x

MARNI COMPANY
Balance Sheet
As of December 31
ASSETS
Cash	$	50,000
Accounts receivable		100,000
Inventory		200,000
Net plant and equipment		650,000
Total assets	$	1,000,000
LIABILITIES AND STOCKHOLDERS EQUITY
Accounts payable	$	100,000
Accrued expenses		90,000
Long-term debt		250,000
Common stock		100,000
Paid-in capital		50,000
Retained earnings		410,000
Total liabilities and stockholders equity	$	1,000,000

MARNI COMPANY
Income Statement
For the year ended December 31
Sales (all on credit)	$	2,000,000
Cost of goods sold		1,750,000
Gross profit	$	250,000
Sales and administrative expenses		30,000
Fixed lease expenses		10,000
Depreciation		60,000
Operating profit	$	150,000
Interest expense		25,000
Profit before taxes	$	125,000
Taxes (40%)		50,000
Net income	$	75,000

Refer to the tables above. Fixed charge coverage for Marni Company is ____.

Multiple Choice

• 15x

• 7.5x

• 0.9x

• 4.6x